Bundle Up, the Polar Vortex Is Coming
We’ve had a busy few weeks, closing out about nine positions, seven for gains, four of which were in the triple digits. So let’s take a breather today. Instead of making a trade, I want to share Chris’s updated polar vortex forecast with you. I think you’ll find it interesting, particularly since no one is talking about it yet.
But before I get into that, a quick update on yesterday’s trade…
The National Beverage (Nasdaq: FIZZ) $45 April put options we bought moved quickly, mainly because there was no volume in the options and we essentially created the market. Not to mention we got in right before the day an earnings report was rumored to be released. As a result, not many people were able to get in under our limit price. So if you weren’t able to make the trade, keep your orders open. If we don’t see a big move on its earnings announcement, your orders will likely have another chance to get filled. We’ll be tracking the $4.90 entry price in the portfolio, but I’ll still give you a heads-up if there’s an opportunity to get in. Right now, our puts are up about 30%.
Keep in mind that this was a unique one: Most of the time, we will not be initiating the first trade in an option. We also tend to have a few weeks, at minimum, after a recommendation before earnings are released, giving us time to enter the trade before volatility picks up.
So don’t worry if you weren’t able to get in. Going forward, I’ll also provide more room in our limit prices in instances like these. And keep an eye out for updates on the text-messaging system we’re putting together. Once it’s running, you’ll be able to see my alerts immediately.
Now for the weather update…
As many of you know, Chris forecast another extreme winter this year — the third one in a row since the 2013 to 2014 season — and it’s about to ramp up. (You can read all about it here.)
Well, on a recent phone call, he told me that prediction, particularly his call that “the polar vortex will be a major player this year,” is right on track. In fact, in the first two months of the new year, a large swath of this country is going to be pummeled by winter storms.
Here’s what he told me:
The warm weather east of the Mississippi River is about to fizzle. About 10 days from now, temperatures are going to plunge from today’s 25 degrees above normal to 20 degrees below normal.
You can expect the colder, stormier weather to arrive just before the first day of winter (December 22).
Right now, storm systems are lining up to hit the U.S. through mid-January, but the next wave of cold air and snow will surge across the eastern third of the country between December 15 and 20. Another very big storm system — chock-full of snow and strong winds — is poised to sweep the Midwest, the Great Lakes and the East Coast just before Christmas.
Right on its heels, is the polar vortex.
It should make its first southward surge of the season around New Year’s Eve. Freezing temperatures will reach southern Texas and northern Florida. A second polar vortex should arrive the second weekend of January, and the following week ought to have near-record cold temperatures coast-to-coast.
The West will continue to be tormented by several inches of valley rain and several feet of mountain snow between now and the end of the year. Most of the West has experienced a cool, moist autumn — about 8 degrees cooler than last fall. Well, now the weather will turn even colder as El Niño-induced storms hit the West Coast every three to five days now through the middle of January.
All of this extreme winter weather should last through February, so I hope you’re bundled up for the new year. But afterward, we can expect a rapid warm-up going into spring — although we’ll have to deal with an active storm season.
For more details, you can find my winter report here.
Last year, our winter trades benefited nicely from the extreme snow season, handing us a series of triple-digit winners, anywhere from 100% to 145%. This year, we’re already starting to mimic that pattern, and I expect that to continue as winter ramps up, so keep an eye out for more alerts.
Until next time, good trading…
Editor, Precision Profits