The boys were out with a bullish piece on China stocks, citing oversold conditions. As JC said: "If the world isn’t ending after all, this could be an interesting place to look for huge winners."
So I've got my eye on a big name that has held up pretty well, all things considered.
As March gets under way, it’s time to review positions with March options that remain open (haven’t already hit profit targets or been stopped out).
Wild couple of weeks, but that doesn't mean we deviate from our plans!
Most trades I put on for All Star Options tend to have a minimum duration of 30 days (short premium plays) and often as long as 6-8 months (for long premium plays). As options approach expiration, greeks like theta and gamma start to become my enemy and whipsaw my P/L. Therefore, as options and spreads get into the expiration month, my best practice is to put each position on notice — it’s time to take action.
The current market calamity is certainly not sparing many of our long or delta neutral positions. The good news for us is the majority of them have defined risk.
At the open this morning, many of our positions traded through our stop-out levels. But an important point to remember here is that we're looking to see a CLOSE below our stop levels. We're don't jump on an exit the second a level is broken intraday.
There is a lot of trading left in today's session. This is not the time to be dumping defined-risk positions into the hole.
Options premium sellers profess a deep and undying love for elevated volatility. But when they get it, are they willing to act? Sometimes when you're in it -- like right now -- it can feel very scary. The urge to sit it out may overtake you. I get it. Been there.
For those of us who plow ahead and like to take advantage of opportunities when statistical edges are backing them up, this next trade is for us.
Some of you are in the BUY THE DIP camp and champing at the bit to make a heroically timed buy here. Others are in the APOCALYPSE camp and are eager to "short-the-world!"
Feels to me the stock market is at one of those inflection points. Personally, I'm finding it difficult to find trades that I'm willing to bet too aggressively long here. But on the flip side, I'm not willing to get aggressively short here either. In situations like this, the best move is often to patiently wait for the market to tip her hand. Problem is, we all know waiting is the hardest part (cue Tom Petty).
Of course, there are strategies options traders can employ profitably when the expected move is a sideways chop fest. And the best way to line the odds of profitability more in our favor is to find situations where a sideways grind has already begun to take shape and it is coupled with higher than average volatility being priced into the options. When selling premium, this gives us some nice cushion to absorb some moves.
I've found just such a situation for us to take advantage of.
The ASC team is out with a piece calling for a potential short-term bottom in the Energy space. I'm liking some of the setups I'm seeing and I've got an options play to get us involved.
JC is out with a piece today that is bearish on Latin America broadly, and more specifically, Mecradolibre $MELI.
Here's the money line:
Here is the chart showing Mecradolibre failing once again near this 677 level that has been trouble since last year. There is clearly still an overwhelming amount of supply here. The bet is that $MELI gets back down to 517, which would put it near the lower end of this multi-year range:
The stock is expensive so if getting short a $650 stock feels pretty unappealing to you, I've got an options trade that may be more palatable.
It's been an interesting couple of weeks, eh? Tesla put on a show, Coronavirus, we've gotten a little two-sided action in the broader markets, and volatility reminded us it still exists. But as we know, volatility fades. And right now, there is some elevated premium levels too tempting to ignore. So we're selling some premium here.
