Happy Friday, traders…
Jeff here.
You need to hear a story about a friend of mine named Jake — a trader who learned a hard (but critical) lesson about timing trades in the options market.
As the clock struck 3:45 p.m. on Friday, July 16, 2021, Jake stared at his screen, weighing a choice every trader is familiar with…
He was holding a batch of call options that had crushed it throughout an otherwise red day for the market. The gains looked good — really good.
However, Jake knew from experience that anything could happen between the Friday close and the Monday open.
He jittered nervously in his chair for fifteen minutes, waffling back and forth between holding and selling…
Ultimately, he decided to sit on his calls, thinking there was a solid chance of more upside on Monday…
But the weekend brought bad news — increased concern about the Delta variant of COVID-19, with rising cases in the U.S. and around the world. News outlets speculated that the resurgence could slow down economic recovery.
All weekend, Jake was glued to his phone, nervously scrolling, stressing over what might happen, unable to enjoy his time off. (I destroyed him at golf because of this.)
On Monday, July 19, 2021, Jake’s worst nightmare came true — the Dow Jones Industrial Average dropped over 700 points, its biggest decline in months.
Meanwhile, Jake’s once-profitable positions gapped down over 50% at the opening bell. He lost tens of thousands of dollars in the process.
After the dust had settled, he wasn’t just down financially — he was mentally and emotionally tapped out. It took him months to recover.
Jake’s story is a cautionary tale about the dangers of holding speculative, short-term options trades over the weekend…
I want to tell you about a simple step I take — one that most traders don’t consider — that has helped me last 25 years in the stock market.
The idea of ‘going flat’ on your positions over the weekend — I call them Flat Fridays…
Flat Fridays can help protect your mindset, your account value, and your overall risk management.
If you want to stop feeling like this over the weekend:
And start feeling like this:
Let me show you the undeniable power of Flat Fridays…
What ‘Going Flat’ Means (And Why I Do It)
Going flat simply means you don’t hold trades over the weekend…
By the end of trading on Friday, you’ve sold all the contracts you bought during the week (or before).
You might wonder, “Why would I exit my positions on Friday if they might go up on Monday?”
The truth is, there’s too much uncertainty over the weekend…
Just because the setup was good on Friday doesn’t mean it’ll still be viable on Monday.
In overnight trades during the week, you only have to worry about the time between the closing and opening bells — 14.5 hours.
But weekends are like a big question mark with considerably more time between trading hours. A lot can happen in two and a half days, especially regarding macroeconomic and geopolitical news.
WARNING: If you’re making a macro-based trade and holding it over the weekend, you’re playing Russian Roulette with your account…
Protect Yourself from Weekend News
News about big macroeconomic events — changes in interest rates, international trade deals, or unexpected geopolitical tensions — can lead to crazy volatility in the markets.
We saw this in April with the Israel-Hamas war, which broke out…
You got it — over the weekend.
If you were holding bullish positions that weekend, your account would’ve taken an enormous hit on Monday, like Jake’s…
But had you gone flat on Friday, you could’ve reacted to the news on Monday morning — which could’ve potentially led to big profits (instead of catastrophic losses).
On weekdays, you can monitor and respond to the news in real time. But over the weekend, you’re stuck in any position you didn’t exit by the close on Friday.
The stock market is closed, but the world keeps turning, and events keep unfolding…
By Monday morning, there could be a major announcement that drastically affects the stock market, and you could find yourself in a position you hadn’t anticipated.
But there’s an easy way to avoid this — Flat Fridays.
The 5 Clear Advantages of ‘Going Flat’ on Fridays
Peace of Mind
Most importantly, going flat gives you peace of mind. Instead of spending the weekend worrying about what might happen on Monday, you can relax, recharge, and prepare for the upcoming week with a clear mind.
Increased Flexibility
By exiting your positions on Friday, you start Monday with a clean slate. This means you have the freedom to reassess your outlook and make up-to-date decisions based on the most current information. Your capital isn’t tied up in last week’s trades.
No Getting Blindsided
As we discussed, macroeconomic events can cause big, fast movements in option prices (gaps). A stock might close at $50 on Friday but could open at $40 or $60 on Monday based on weekend news — which is impossible to predict. By going flat, you safeguard yourself from getting blindsided by these gaps in the wrong direction.
Improved Risk Management
Trading options effectively is about managing risk. By going flat on Friday, you’re protecting yourself against any risk whatsoever over the weekend.
Stress-Free Study Time
With no open positions to worry about over the weekend, you can use that time to study, assess, and prepare for the upcoming week. Do your homework stress-free while the market is closed, so you’re ready to crush the market come Monday morning.
But … What If You Miss Out?
Almost all concerns with going flat on Fridays are driven by FOMO…
You’re worried about what might happen instead of focusing on making the correct move for your strategy.
What if your stock would have gone up on Monday, and by selling on Friday, you miss out on potential profits?
Sure, this may happen…
But remember, professional trading isn’t about nailing every trade or hitting a home run every time…
It’s about making consistent, informed decisions that protect your capital while giving you solid opportunities to profit.
And that’s exactly what Flat Fridays allow for.
Plus, what if the opposite happens?
You hold over the weekend, only for some random news story to completely ruin your trade thesis and send your position deep into the red…
You’ll end up like Jake — stressed all weekend, and poorer at the opening bell.
This is why going flat on Fridays is the best recipe to protect your profits — and your mindset. It’s a simple idea I’ve used for decades to manage risks and uncertainties.
Next week, we’ll go over the recent CPI report, jobs numbers, and the beginning of earnings season.
Go flat, have a great weekend, and prepare for the open on Monday.
Take care,
Jeff Zananiri
P.S. As we head into a volatile election season, many traders are all but guaranteed to lose money…
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