BY MARK SEBASTIAN
March 14, 2025
Hey Traders,
Trump has been demanding lower rates and with him – is the trap set for a dovish Fed?
Because I gotta tell you, Wednesday felt like a head fake once Thursday made its intentions clear.
The S&P 500 closed at a new recent low and entered full on correction territory. I think we are potentially in line for an ugly next day or two.
So what do you do?
- Have cash on the side so you can jump in when things bottom
- Be aggressive with taking dollars – tighten P&L targets
- Have blow out the top hedges. You don’t need to spend a lot, but with VIX only 24 and the market possibly ready to collapse, you can take advantage of CONVEXITY
- Have a bear super overnight (go us!)
One more idea: try a two way trade. They are a great way to assault the sell off and when trading it, you never have to really worry whether the market goes up or down – it’s nice. If you missed Hannah and Andrew talking through the approach – watch it here.
The lone holdback for me is the VIX which looks soft.
Hedges are rolling lower, hedges are being sold, volatility is coming down – just keep that in mind.
Let’s Recap Yesterday’s Trade
Here is where I put the trade out.
Things moved a little quickly for me so I missed getting in. However, if you did get .75, you were probably able to flip half on the lows.
The market looked like it was ready to break but they defended 5500, not sure they do that today.
…Today’s Outlook
There is legitimate risk that we gap lower on Friday. The question is whether or not that is bought.
If it’s bought, we will close our Super overnight. If it keeps moving lower, we ride it.
With the volatility in the market right now, cash zones are tough. We might look for a straight XSP play on today.
Call Ted if you aren’t currently a member: 888-872-3301.
Your Only Option,
Mark Sebastian
Mark Sebastian
Founder & CEO, Option Pit
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