My Favorite Small-cap Trade for Q2

JC Parets
April 1, 2024

Small-caps are an interesting bunch.

When you add up the value of all the stocks in the Russell2000, it may as well be nothing.

There companies in the United States that alone are worth more than all 2000 companies combined.

I think it's important to put things in perspective.

These companies don't actually matter that much. Besides, they always kick out all their best players, by definition.

So let's not overthink the meaning of small-caps doing well or poorly relative to their large-cap counterparts, who actually matter.

"But JC small-business are very important to the economy".

Maybe, but I couldn't care less about your economy.

I'm interested in money flow.

We've seen strength in Small-cap Industrials, Small-cap Materials and Small-cap Energy.

But the rest of small-caps have mostly been a mess.

One of the worst areas have been in Small-cap Healthcare. A big reason is because of how many little biotech stocks are included in this group.

My favorite trade in Small-caps as we enter Q2 is in Biotechs.

We put on the trade this week, but you can still get in near similar prices.

My trade is what we call a "Delta-neutral Credit Spread".

Doesn't that sound fancy?

lol it's definitely not.

All it means is that we're taking advantage of just how messy biotech stocks are in this environment.

Also, when you look at our entire universe of ETFs, Biotechs have the highest implied volatility.

What that means is that this ETF is the one that's paying us the most.

We like that.

This is my favorite trade right now in Small-caps as we enter the 2nd Quarter of 2024: Delta-neutral Credit Spread in $XBI.

Last week at our LIVE Options Bootcamp, Sean discussed our favorite types of trades, depending on which direction we're betting on and whether we're in a high volatility or low volatility regime.

You can still catch the replay here.

The video replay is about to be taken down for good, so make sure to watch it right away.

Premium Members of All Star Options get all the trade details for each trade we put on - 3 trades every week.

This Wednesday is our Options Execution Lab, reserved only for Premium Members of All Star Options.

In this Execution Lab, Sean will go into detail as to how we choose which strike price and which expiration to choose when putting on each of our options trades.

So not only do Premium Members of All Star Options receive all the details for each trade, you'll also see the complete process of putting the actual trade on!

Hence the name - Options Execution Lab.

For all the details on my favorite Small-cap Trade for Q2, sign up here RISK FREE for All Star Options.

You will also start to receive 3 trade ideas each week, and complete access to our Options Execution Lab this Wednesday at 3PM ET.

Click here to add your name to the list.

See you there!

JC

 

Filed Under