VIX is near its highest level of the year and this is being reflected in options premiums nearly across the board.
It's also earnings season, so we want to be careful not to get caught in any potential earnings-driven landmines.
With this in mind, I've got a big cap name that has already reported earnings, is trading in a range, and is still exhibiting elevated options premiums -- the perfect recipe for a delta neutral options trade.
What do you call a blend of systematic and discretionary trading?
Systionary trading?
Discretionatic trading?
I think I’m leaning towards the latter.
Early in my trading career, I started up a small commodity futures hedge fund and prided myself on being fully systematic.
An algorithm derived the signals, I entered each trade manually, and I honored each signal religiously. To my credit, I stuck with it, no matter what. And I was rewarded for doing so, earning my investors 58% net returns on their money (net of my 2/20 performance fees) in just 18 months.
So, it was ingrained in me early on that systematic trading was good for me. It kept my emotions out of the decision-making process.
I’ve been chasing the systematic dragon in index options trading ever since.
In today's Flow Show, Steve and I put our heads together to find a good trade to take advantage of elevated options premiums in a big-cap name that may have seen the worst of the selling and is now may be putting in a pivot.
That name is Amazon $AMZN and here's the chart where it stands right now:
As can be seen in the chart below, $RSG has certainly been winning over the long run. And with this week's earning report sending the down 5%, it feels like a great opportunity to get positioned on the dip.
In today's episode of The Flow Show, me and Steve Strazza talk about the uniquely interesting market we currently find ourselves in, and we delve into a sector that appears to be making a long overdue turn higher, and a stock within the sector that is positioned for a potentially monster breakout.
Here's the big picture setup of Viking Therapeutics $VKTX:
When Michael Nauss first sat down at a trading desk, his computer had a keyboard and a screen. But no mouse.
And his screen displayed an order book. But no charts.
Thus began his career as a scalper working the order book, who paid no attention at all to trends or technical analysis. He was simply trying to find spots to buy ahead of large buyers and flip the position out for a quick couple of ticks. Do this a couple hundred times per trading session and perhaps he’d have a successful day.
This was all part of Michael’s journey of learning to walk before he could run. And it is a mantra that sticks with him to this day as he himself continues to learn and helps many others learn the craft of trading.
Michael says: “Learning is often about “UN” learning.“
People are frequently drawn to trading by a social media personality or a brokerage advertisement, and they are like moths to the flame of fast riches and early retirement. Then they lose.
The All Star Charts analyst team continues to believe that the industrial sector will be one of the leading areas to lift the market higher as sector rotation works its magic to keep this bull market going.
And the chart of Caterpillar $CAT looks like a potential failed top in the making:
If we're right, $CAT could quickly recapture all-time highs north of $382 per share and then the sky's the limit from there.
But if we expect it to continue, then we're going to need to see some rotation into some new sectors to bring fresh cash into the market and keep the wave going.
One sector that my Analysts feel has the potential to pick up the slack is Precious Metals. And the name that Steve Strazza and I discussed on today's Flow Show has the potential to ride the sector wave as well as play catch up to its big brother Gold.