Market lesson: Have a disaster playbook ready

The back story: At the end of August, I did an interview for the Raging Bull podcast talking about General Motors options. I said that GM options were a good play after the hurricanes we had just seen because 40 percent of the car-buying in Texas happens around storm-ravaged Houston, and Texans love their domestic cars and trucks.

Most people think of GM as a stodgy, boring company. But look at the stock’s chart since the August 30 podcast and tell me that chart isn’t exciting. I’m not taking all the credit or anything, but if you want to give it to me in the absence of any other catalyst, that’s fine with me.

What I did: At that point in time, I was overweight oil stock-option trades, and I simply didn’t have a ton of available buying power for GM. I put GM stock options on my watch lists for members on a daily basis and they nailed it, especially those buying to open call options.

The moral of the story: There’s a reason why the financial news media and others due stories around big events about what stocks stand to gain or lose ground. Those events, however devastating to those affected by them, have real money-making potential if you find the right opportunity.

Without the hurricane, I don’t see GM making its current run; with the storm came the opportunity.

You need to have a playbook for times like this, default stocks, go-to names and other ways to trade the news. That way, once you know that your family is unaffected and safe from these literal and figurative storms, you are ready to turn them into something good.

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Davis Martin is the head trader at Dailyprofitmachine.com. He trades SPY calls and puts and swing trades individual stocks and stock options. At the time this article was published on RagingBull.com, he had no shares, options or open orders in G

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