What a wild week, eh? On Tuesday, the rug got pulled on dip buyers with the latest inflation data point coming in hot, throwing a whole bunch of confusion into the market regarding the future of interest rates. Or, so I'm told.
The net result for us options traders is that there is once again some juicy options premium for us to sell into. And we've got a bunch of sloppy ETF charts that look primed for some net sideways actions over the near term.
We've been keeping a keen eye on Uranian stocks over the past few weeks. Throughout the recent broader market weakness, it became a common refrain in our internal analyst meetings: "...we're still seeing relative strength in Uranium stocks."
When we keep saying that over and over, maybe the market is trying to tell us something? *slaps head*
The stock that seems the strongest to us in the sector has been showing signs this week that it's ready to break out. So let's get to work.
Today, it looked like the market wanted to continue yesterday afternoon's powerful late rally.
Well, it was not to be, as stocks have broadly declined since lunchtime and indices are in the red as I type this.
For me, this offers yet another opportunity to sell some delta-neutral options premium to continue providing some ballast to the directional bets in my portfolio.
With the rise in $VIX (the "fear gauge") over the past several trading days continuing to persist, we've been on the hunt for options premium selling opportunities. Higher volatility environments lend themselves to better opportunities for premium sellers who can manage their risks and size their positions conservatively.
As such, we're going to sell some premium in the banking sector to take advantage of elevated premiums and what appears to be a high likelihood of continuing sideways action.
With volatility still up since Friday afternoon's stock market freakout, we're going to continue to take advantage of this volatility rise to add an additional, much-needed delta-neutral credit spread to our portfolio to diversify our risks somewhat.
So today I'll be positioning into an index ETF near the top of the implied volatility charts.
"Jackson Hole" has delivered volatility once again. Seems we can always expect fireworks when the bigwigs gather at a luxury resort in the mountains. Must be nice...
We're going to take advantage of some of this volatility by positioning into a delta-neutral credit spread in the highest implied volatility ETF currently on the board.
That's right, we're in the 'hood. Robinhood stock $HOOD, that is.
Steve Strazza has been pounding the table about this name for so long that JC and I finally relented and agreed that it's starting to become that "put up or shut up" time.
With the stock swimming just below $10 per share, JC said: "Let's just leverage into this thing! If it's gonna work, we'll crush it. If it's not going to work, we'll know pretty soon. Below $9 we're out."
Today's trade comes from the latest Young Aristocrats report. And today's dip offers us a chance to get into this trade with a very nearby risk management level (today's low). Either this stock is going to make a run or it's going to fail, and we'll likely find out quickly.
As such, we're taking a long position in October call options.
...but it might win us cash-money gains, which is all we're really here for anyway. Give the participation trophies to the strivers.
Today's trade comes from a "dirty" sector. One some investors don't like to talk about in polite company. And it certainly won't win us any friends in the ESG crowd. But again, who cares?
During our morning Analyst meeting today, the team was looking across a variety of asset classes and sectors to identify the current leaders, and those likely to continue tracking higher if the broader stock market rally is for real.
One sector that stood out starkly was Big Pharma.
There are some monster bases in the process of resolving higher here.
