The most significant news of the week occurred over the weekend when the U.S. and Israel attacked Iran and killed Ayatollah Ali Khamenei, the country’s supreme leader for nearly four decades, among others.
Donald Trump announced Khamenei’s death on Saturday, which was also confirmed by Iranian authorities. The US president said the bombing will continue “uninterrupted throughout the week or, as long as necessary to achieve our objective of PEACE THROUGHOUT THE MIDDLE EAST AND, INDEED, THE WORLD!”
Iran has responded with strikes on Israel and across the Middle East, targeting countries that host US military bases, including Bahrain, Qatar, Kuwait, Kuwait, and the UAE.
Other news was higher inflation readings; mixed earnings, including a negative reaction to NVDA’s earnings; and Trump’s increased tariff threats.
Markets showed stark rotation: defensives led amid growth concerns, while cyclicals like materials and energy held firm. Financials suffered most from squeezed margins and AI/credit worries; tech lagged on software/AI jitters.
Strength was seen in Utilities, Consumer Staples, Healthcare, Energy, and Materials.
Weakness persisted in Financials, Software, parts of Technology, and select AI leaders.
When defensive sectors lead while Financials deteriorate, it is a cautionary message — not outright bearish, but clearly cautious.
At the same time, Materials and Transports are not collapsing. That argues against recession panic.
The 10-year yield dropped below 4%, signaling expectations of slower economic growth, a higher probability of Fed easing, or capital rotating toward safety.
The political drama continues with a partial government shutdown which starting on 2/14 over funding of Department of Homeland Security and ICE. Many employees, including TSA workers, are now working without pay.
Nevertheless, for the week, the S&P, Dow, IWM, and Nasdaq fell between 0.5% to 1.0%, all fairly rangebound
A few earnings reports this week that could give us additional insight into software bottoming and/or rotation are CrowdStrike (CRWD), Target (TGT), and Ross Stores (ROST) on Tuesday. Broadcom (AVGO) on Wednesday, and Marvel Technology (MRVL), Ciena (CIEN), and Costco (COST) on Thursday.
Nothing changes in how we operate. We will continue to trade the same price patterns, manage risk the same way, and let the market—not opinions—tell us when opportunity is present.
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NOTE: Please see the document in RESOURCES entitled Master Trader Guidelines for Trading the Open and Gaps.
Because your success is vital to you – and us. Before selling options or credit spreads, we urge you to review the valuable and detailed information that we have provided for you in your Member’s Area.
Basic Money Management A quick simplified approach to calculating contract size is to simply base your contract size based on the number of shares permitted in your Trading Plan as if you were trading the stock or ETF. Simple Share Sizing = $ Risk / Stop Loss The amount of money that you are willing to risk – divided by – the stop loss amount.
For Example, $100 / .20 = 500 shares. Credit Spread example, if your Trading Plan allowed you to trade 543 shares of AAPL based on the stop loss, then simply round down to the nearest hundred and short an equivalent number of contracts of the option. Since 1 contract represents 100 shares of the underlying, this would be five (5) contracts.
Money Management for Trading and Investing
Proper money management for investing and Trading starts with position-sizing based on the amount of money you are willing to risk on a signal trade.
CLICK HERE to review these Master Trader Guidelines and Basic Money Management and Position Sizing Table.
NEW OPTIONS TRADING IDEAS
Here's our Checklist for shorting options/spreads using MTS. Spreads have unfortunately been wider than normal recently which is why the number of trades recommended in this letter has been fewer than normal. Additionally, when the VIX is low, the premium received has not been attractive. Most of you also subscribe to our Advisory Swing and Options Letter and, as you can see, we have many Directional ideas.
3/2: AMZN – Over $211.59, consider shorting Mar (3/6) $202.5/197.5 bull put credit spread for a limit of $.60/share (closed at $.72/share). Inverse Head and Shoulders Breakout of a bottoming pattern at the 20-MA. Stop $202.88 (however, stop out of position if the “debit/cost to close” the spread reaches 2x premium received, which would be $1.20/share in this case, which means that you are not risking more than 1:1).
As you know, by selling spreads on stocks and ETFs where MTS indicates price is unlikely to go, we become the “smart money,” getting paid to take calculated, well-defined risk.
Check out the blog article with more information and monthly results, CLICK HERE
Professional consistency, short-duration trades, and risk-controlled income — that’s what defines the Master Trader approach.
Master Trader and You Building Your Financial Future Together!
Happy trading! If you have any questions or comments, please e-mail Greg Capra at Greg@mastertrader.com or Dan Gibby at Dan@mastertrader.com
All the best,
Greg Capra Managing Director of Master Trader
Dan Gibby Chief Options Strategist
NOTE: Master Trader will show the opening and closing prices of all stock and options trades. We recommend that all traders and investors use proper share sizing for positions and money management. However, we cannot recommend what that is for your particular trading style, risk tolerance, or account balance. We urge you to calculate your own share/position size based on your individualized risk parameters, Trading Plan, and familiarity with the proposed trade strategy and risk. Advanced Management Strategies (AMS) covers in detail foundation and advanced position and money management.
NOTE: Master Trader and its representatives may have existing positions in actual or other trade recommendations before or after suggested herein. Additionally, we may manage them differently for internal purposes based on different risk parameters than noted herein. All trade ideas and content are for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, option, or investment strategy is suitable for any person. Trading securities can involve high risk and the loss of any funds. Significant gaps or volatility can increase these losses, particularly for short option strategies. Investment or trading information provided may not be appropriate for all investors, and is provided without respect to individual financial sophistication, financial situation, investing time horizon or risk tolerance. Supporting documentation for any claims (including claims made on behalf of options programs), comparison, statistics, or other technical data, if applicable, will be supplied upon request. Master Trader Consulting, Inc. is not a licensed financial advisor, registered investment advisor, or a registered broker-dealer. Options, futures, and futures options are not suitable for all investors.
