My Delta Report subscribers have a BIG advantage over subscribers to other newsletters.
You see, most financial newsletters publish their recommendations when the market is closed. As I’ll argue in a moment, that practice tends to artificially inflate the price of the recommended security. And it results in subscribers paying more than they should for the position.
I made 76 trading recommendations to subscribers last year. Each one was published during market hours. And in just about every case, I think the practice of publishing during market hours has resulted in my subscribers getting a better price on their trades.
But, since this isn’t a normal practice, I often get asked about my reasoning for it when new subscribers come on board. For example, here’s a question I often get from new subscribers…
Your timing on the emails and trades is disadvantageous for your subscribers that can’t make the trade immediately upon receiving the email. It would be so much better to make these trades after-hours so we can plan on doing it when the market opens.
– Tony
Hi Tony. Thanks for writing in.
When I first started writing a trading newsletter – more than 13 years ago – we’d publish the newsletter after the market closed. That would give all subscribers plenty of time to read through the entire letter, do their own homework if they wished to, and thoughtfully decide whether or not to take the trade the next morning.
That all sounds good – in theory.
In practice, it was a mess.
Have you ever shaken up a can of carbonated soda and then tried to open it? That’s what happened to every one of my recommendations.
Buying pressure built up as subscribers entered their orders overnight and in the pre-market. Brokers, market makers, and other market participants would see this huge stack of orders lined up to buy at the opening and they’d adjust their sell prices higher. Or they’d pull their sell orders off the table – thereby limiting the supply and increasing the pressure on the buy side.
The recommended trade would spike higher on the opening. Most subscribers couldn’t get into the trade because it popped above my maximum buy price. Many subscribers would then chase the trade higher – paying much more than I recommended. They’d then have a horrible risk/reward setup. And it would be unlikely they’d ever make money on the trade.
As for the subscribers who didn’t chase the trade, well, they already showed their cards to the market. All of the other market participants saw the long line of buy orders and the prices subscribers were willing to pay. Market makers could buy a few pennies above those prices knowing that if the trade went south, they could bail on their positions and risk only a few pennies. And, if the trade started to take off, a large number of waiting buyers could possibly just start chasing the stock.
So the trade would hardly ever fall back into buy range.
Like I said… it was a mess. It is far easier for the market to absorb the buying pressure on one of my recommendations if it’s made when the market is open.
Yes, the initial flurry of activity does tend to pop the price up a bit – but usually not to the point where the risk/reward setup turns negative.
Sometimes, the recommendation does move out of our price range. But, it almost always comes back to it within a few hours or a couple of days.
I can recall a good example of this action in a retail stock call trade recommendation I made late last year.
Both the stock and the recommended option popped higher after my newsletter was published. Subscribers who were quick to act got into the trade. But you only had about an hour to do so before the price of the option jumped out of range. That’s because the Najarian brothers on CNBC pointed out the “unusual” option activity in the trade I recommended.
The next morning, though, the call options were back in our buy range. In fact, you could have bought them a little cheaper than when I first recommended the trade.
So, whether you rushed into the position when the recommendation first went out, or you took your time and thought about the trade overnight, you still had a chance to get into the position. I think that holds true for just about every trade I recommend.
There are exceptions, of course. There are times when a position moves and never comes back into range. That’s going to happen every once in a while.
Heck, between the Delta Report and the Delta Direct blog, we usually make at least one trade recommendation per week. It’s inevitable that a few of those will move out of range before you can get into them.
For the most part, though… with a little patience, you shouldn’t have any trouble getting into most of my trade recommendations within a day or two of my publishing them.
And I can tell you from experience, it is vastly easier to get into the trades – and get much better prices on them – if they’re published during market hours.
Best regards and good trading,
Jeff Clark
P.S. It’s things like this… things I do differently than other newsletter writers… that make the Delta Report such a valuable service.
But it’s the bigger parts – like the secret key I discovered that turned a near-disaster into a fortune – that can further turn the tide in your favor.
Reader Mailbag
Today in the mailbag, a Delta Report reader reports on their recent trades…
Jeff, I’m writing to thank you for two recent trades. The SPY put trade: $18K became $29K – a 61% gain. And the GLD call is up 22% as I speak. Pretty damn good, my friend. Thank you so much!
– Kenneth
And a comment in agreement to yesterday’s essay on the VIX…
Hi Jeff, I agree with you. The VIX looks good for a rally here. I placed small holding with UVXY.
– Michael
Thank you, as always, for your thoughtful insights. We look forward to reading them every day. Keep them coming right here.