We don't go bottom-fishing around here often. Fighting trends is not my idea of a good time.
But every so often we'll come across a beaten-up name that has so decisively destroyed bulls that there is no fight left in them. And when all the hot money has capitulated and exited their positions, THEN it becomes a compelling idea.
One such name in the Marijuana space -- yep, that utterly annihilated sector -- has found support at a key former resistance level after a 90% pullback from all-time highs
Trading opportunities aren't limited to just U.S.-based corporations. And thanks to ADRs, we don't have to go to other foreign exchanges to exploit opportunities in different countries. These companies have tracking shares -- often with tremendous liquidity -- on our exchanges here.
One such opportunity, with a big base that is showing signs of resolving higher, recently appeared in our International Hall of Famers report last week.
Is that a dead cat bounce in the Biotech ETF $XBI that will quickly fade? Or is this week's hard pivot off the $80 level the new floor?
I don't know the definitive answer, but the bet I'm going to make is that $80 will hold at least for a few weeks. If it does and as long as $XBI doesn't overshoot on the upside from here, I think this ETF is offering us a great opportunity to sell some premium here.
The move in metals, commodities, and materials was pretty rapid during the last couple of months. Given that, it's little surprise we've seen a pullback in a lot of these names over the past week or so.
One name that was recently on our Hall of Famers report rose rapidly with everyone else. And now it feels like it overshot a bit on it's pullback and it's offering a nice tactical opportunity to swoop in and steal some profits.
You might not know this about me, but I’m a “graduate” of Chicago’s famed Second City Training Center. This is the school where all of Second City’s famous improv comedy graduates got their start before they became regulars on the main stage, and then went on to Saturday Night Live and beyond.
My first apartment in Chicago was a mere one block away from the Second City theater and on my way home from my office at the Chicago Board of Trade, I’d always pass by the theater doors and see advertisements for their training program. One day, in a fit of curiosity and inspiration, I said: “why not?” With no plan, I walked in the door, found the right person with the right information, filled out a form, ran my credit card, and just like that I was signed up to begin classes when the next training started in just a couple of weeks!
It was as if a spirit had possessed me and dragged me through those doors. When I walked back outside and was hit with the typical frigid Chicago wind of early January, it suddenly hit me – I was scared! What had I done?
In light of global events, we're seeing significant market reactions all over the place. And it seems like the narrative changes on a daily basis. Now more then ever, as a Trader, is it important to turn off the news and follow price. Price doesn't lie.
One trend that has been signficant and showing no signs of stopping is the bullish breakouts we're seeing in energy, commodities, and materials.
And today's name is one of the bellwethers in the space that is beginning to breakout from a multi-year base.
The hunt for options premiums to sell continues. And with VIX showing signs that it might want to give up the 30 level for a little bit, we may have the trend of implied volatility mean-reversion beginning to become a wind in our sails.
A quick perusal of the most liquid ETFs options markets that I follow revealed a surprising sector at the top of the list: Utilities. And the recent price action suggests to me we may have seen the $XLU ETF get a bit ahead of itself, and it could be due for a little consolidation.
I'm sounding like a broken record about elevated options premiums and my desire to be a net seller of options, and for good reason: $VIX continues to hang tight in the 30's. And when volatility is this high, it tends to favor the premium sellers. Not every time, but most of the time.
So during our morning Analyst meeting, me and the team were kicking ideas around for putting an options trade on today. And while there are some tempting candidates for putting delta-neutral credit spreads on -- we all coalesced around the idea of leveraging the high prices of put options here into a long position in Nucor Corp $NUE:
I feel like this has been the lead for many blog posts recently, but the trend continues: options volatilities continue to remain elevated across the board with $VIX holding above 30, and this makes me want to continue favoring strategies that are net short options premium.
But with the trade today, we're going to leverage options premiums to help us finance a bullish bet on NASDAQ stocks.
It started out with JC and I wanting to simply sell premium, but when we looked into $QQQ options it became pretty clear that we could get paid handsomely if recent lows end up becoming a pivot to higher prices and we took some put premiums to buy out-of-the-money calls.
With VIX closing the day today north of 30, I'm still on the hunt for premium selling opportunities.
So as always, I perused my list of the most liquid options ETFs and found an opportunity where premiums are elevated and the chart suggests some rangebound trading action is likely over the next few weeks.
The day got away from me so I didn't get a chance to put it on yet, but I've identified a delta neutral candidate that I'll be looking to enter in the early going tomorrow AM.
