While the US Stock Market has pulled back a bit this week, we've seen $VIX pop its head back up above 23 and print its highest levels in a month. And this isn't entirely surprising given that the highly watched Russell 2000 $IWM has been struggling to hold on to its yearlong support level of around 210.
But has the "all-clear" signal for the bears fired? Is it time to pile in short? We're not convinced yet.
Meanwhile, we've seen some pullbacks in semiconductors stocks we own ($NVDA and $MU most notably) that may get us stopped out soon. But when we zoom out to the bigger picture, as seen via the $SMH Semiconductors ETF, we see that we've been in a range for quite some time now. And even if we'd lose the support of this recent consolidation range at around 290, we can expect the 270-275 zone to offer a new level of support:
We're selling a $NVDA February 260/240 Bull Put spread for an approximately $4.75 credit. This means we’re in the regular February monthly expiration options and we’re short the 260 puts and long an equal amount of 240 puts to define our risk.
Check out our short video with the thought process behind these trades:
The V-Bottom is back! (At least as of the time of this writing). What a bounce stocks have seen off Monday's nadir.
Have we stuck the landing and its back to new all-time highs for the broader indexes soon?
Time will tell. But the short term bet we're making today is that Monday's low will hold at least for a couple weeks. And today's trade in a leading stock in a leading sector reflects this stance. When in doubt, stick with the strongest names in the strongest sectors, right?
On days and weeks like this, I love to look for opportunities to sell premium into the elevated implied volatilities we're seeing rising across the board. With $VIX back up above 20, you'd think there's been plenty to pick from.
Problem is, I haven't found any delta-neutral setups that look good today. Too many busted charts on the most liquid ETFs makes finding support levels that both make sense and offer enough premium to make it worthwhile from a safety standpoint hard to find.
So, as always, I reached out to my team from some other ideas.
We've been asking the question: "how bad can things be if we're seeing this kind of relative and absolute strength in the banking and financial sectors?"
Steve Strazza served up an interesting bullish play that is either a gift of a pullback, or we're buying the top. If you're market the bullish, then you gotta believe this idea has merit.
The first two days of this week completed a nearly text book Santa Claus rally. Then on Wednesday, it appears the Fed may have stolen his Sleigh and now his reindeer have no idea which way to steer!
This indecision has played out in the options market by raising the risk premiums being asked across a wide sector of index ETFs.
At times like this, I like to go hunting for premium-selling opportunities. And I've got one teed up so lets get to it!
We're buying an $MU June 100/125 Bull Call Spread for an approximately $6.50 debit. This means we’re long the 100 calls and short an equal amount of 125 calls
Check out our short video with the thought process behind these trades:
If this blog post was served up to you when you were searching for the latest scare porn on the omicron covid pandemic, I'm sorry to disappoint. But if you'd like to draw a correlation between the rising omicron cases and rising share prices of Micron technology stock --- you wouldn't be the first person to commit a #ChartCrime in service of a good story.
Micron Technology $MU is a stock that's been on my radar since the team published the Under the Hood report around Christmas highlighting the setup.
The All Star Charts team put a report out about the Metals sector end of last week, highlighting undercurrents investors should be keeping an eye on. Not everything is sending "all-clear" signals yet. But there is one particular name that definitely has my attention and is offering a good reward-to-risk opportunity to get involved.
I'll spare you any further preamble and we'll get right into the money quote that has me interested:
We’re buying an $MPC Feb/Apr 70 Call Calendar Spread for around a $1.10 debit. This means we’ll be short the February 70 calls and long an equal amount of April 70 calls for a net debit
Check out our short video with the thought process behind these trades:
I'll spare you the suspense -- we're getting long Marathon Petroleum $MPC here.
The title of today's post is not a trite pun. We are indeed positioning for a bullish move, but it may take a little bit to develop the way we want it to.
Thankfully, the beauty of options trading is that we can craft a strategy that takes advantage of a slow-developing play. So let's get right to it.
On Monday morning, if you were on twitter or watching the teevee you'd have assumed the stock market was about to get cut in half and the pitchforks were going to be lining up outside the Federal Reserve building in Washington, D.C.
Then, the market did what the market does and now here we are with the S&P 500 looking like it wants to make another run at all-time highs.
Forget about market volatility --- how about trader's emotional volatility?!
With this in mind, there is still some nice options premium being priced into individual names that offer us some unique tactical opportunities for some quick gains.
