Jack Carter’s scan just revealed ONE ticker primed to pay this week.
Some traders chase headlines. I prefer probabilities.
That’s why today’s best opportunity — at least for me — is coming from a stock you probably haven’t thought about in months: Sprouts Farmers Market (SFM).
It’s not flashy. But it’s handing us a clean little setup for structured premium.
Let me explain.
No Index Play Today
First off, I’m still steering clear of broad index trades this week.
We had the Fed decision today — and when I placed this trade, that wasn’t behind us yet.
As such I didn’t want to tie capital to something that could get jerked around by Powell’s tone or a surprise datapoint.
It’s not fear. It’s just risk calibration. “Letting the dust settle first.”
Sprouts: Calm Before the Move
SFM reports earnings after the bell today. It’s been trading quietly — no massive run-up, no huge crush. But when I looked at the options board, the premiums stood out.
Not because they were extreme — but because they were rich enough to sell, especially in a directional structure that gives me room.
Here’s the setup I took:
- Sold the 135 put
- Bought the 120 put
- Both expiring August 15
That brought in a net credit of about $0.70. Not bad for a short-duration trade on a stock that doesn’t need to go anywhere special.
Why It Works: Mean Reversion and Rich Premium
This isn’t a “two sigma” mean reversion play — SFM hasn’t gotten that extended from its average. But that’s okay.
When a stock’s volatility is elevated, even without a big price move, the options get inflated. And inflated options are what we look to sell, especially when the structure gives us a big buffer.
In this case, I’ve got a decent margin of safety below the current price, and the long put at 120 caps my risk.
That’s what I call a “cash machine” trade — not built on prediction, but on smart structure and risk/reward balance.
Final Thoughts
Earnings season isn’t about betting on direction. It’s about finding structure that gives you edge.
With this SFM trade, I’m not trying to outsmart the market. I’m just selling premium in a spot where the odds are tilted in my favor.
That’s enough for me.
Talk soon,
JD
The Rational Trader
