[FREE WORKSHOP] The ONE Number You Need To Pick Stocks That Have the Power to Double or More!
Hey everybody, JD here with your Rational Trader Market Analysis daily.
We’re back from Labor Day weekend, and as I like to say — the Wall Street A team is back on the desk. Right away, we’ve got volatility heating up. The VIX is up more than 15% this morning.
Last week, the “B team” was running things. They didn’t do a great job setting up the market, and now we’re paying for it. That means you should expect lots of chop this week.
But chop or not, we’re still trading the mean reversion cash machine. And today, I’ve got two setups for you.
Trade #1: Dollar Tree (DLTR)
Dollar Tree reports earnings tomorrow. The stock is trading right around its mean, which makes it a candidate for a reverse iron condor.
Quick refresher: a reverse iron condor is a four-legged options trade that profits from a big move in either direction. You buy a call and a put at the same strike, then sell another call higher and another put lower. You’re basically buying volatility.
Here’s the structure I like:
- Buy the $111 call
- Buy the $111 put
- Sell the $116 call
- Sell the $106 put
This spread costs about $4.53, and it can pay up to $5. For full profit, we need about a 4.5% move. Based on past behavior, I think we could see closer to 10% post-earnings.
Trade #2: Zscaler (ZS)
The second setup is Zscaler, ticker ZS. Same approach — another reverse iron condor.
- Buy the $270 call
- Buy the $270 put
- Sell the $285 call
- Sell the $255 put
This one costs about $13.10 on a $15-wide spread. That means max profit is $1.90, and we’d need a 5–6% move. Again, perfectly reasonable for this name after earnings.
Wrapping It Up
So those are the two trades for today: Dollar Tree and Zscaler, both reverse iron condors, both designed to profit if these stocks move big in either direction.
Even with earnings season slowing down, the mean reversion cash machine keeps cranking. Volatility is back, and we’re still going to be busy.
That’s it for today, folks. I’ll see you tomorrow with more trades.
Talk soon,
JD
The Rational Trader
