Yo Pit Crazies,
The fake news machine is going into overdrive daily at this point.
As I write this, the Russians have posted terms for a truce. They’re not too far off from things they have demanded in the past that Ukraine does not want to give up.
So, stalemate.
Where there is no stalemate is in oil prices, where Brent Crude remains above $125 per barrel.
The potential commodity shocks in other key industrial metals are not going away either.
That is putting some big weight on the semiconductor industry.
And one name really stands out.
Taiwan in the Chinese Crosshairs?
I am pretty sure Putin must have read Clausewitz, whose big statecraft strategy was … war.
His approach could roughly be summarized as “bend the enemy to thy will.”
That is clearly playing out in the Ukraine right now – and dragging the rest of the globe with it.
Taiwan is another country that is the object of affection of an autocratic government, namely the Chinese Communist Party (CCP).
The continuous rumors there are grist for the mill, and the No. 1 company in Taiwan is Taiwan Semiconductor Inc (Ticker: TSM).
That stock is down $45 since late 2021.
TSM three-month chart with IV 30 in red on the bottom.
It’s hard to imagine a stock that is grabbing all of the bad headlines, a 19th century Prussian general’s philosophy and good, old fashion panic selling.
Yet, here we are.
I like the idea of short-term put spreads and long-term call spreads in TSM. In the 2020s the headlines always seem to be much worse than what is actually happening.
TSM is no different, but it could get wooly in the meantime.
THE LESSON: Read a little history, it helps with the present.
The Rundown
Capitol Gains w/ Frank Gregory
We closed some Canejo Corp (Ticker: CCJ) calls for 80% on the big pop in Uranium stocks on Monday.
Power Income Trader
PIT posted a rosy 133% one-day gain on some SPDR Select Sector Financial Fund (Ticker: XLF) put spreads Monday.
Bill and I are working on an Xtrackers Harvest CSI 300 China (Ticker: ASHR) call spread and SPDR S&P 500 Trust (Ticker: SPY) put spread pair with the SPY put spreads close to a 50% close.
More good news is we have gains of 16%, 33%, 13%, 123%, 30%, 62% and 14% in the prior seven trades.
What’s our secret?
Trading Legion
I started closing my Apple Inc (Ticker: AAPL) put flies for 33% profit per fly.
Nitro Trader:
Option Pit CEO Mark Sebastian uses a formerly private strategy for trades that can profit in either direction.
Mark went long Marathon Oil Corp (Ticker: MRO) call spreads versus Vaneck Russia ETF (Ticker: RSX) call spreads in a pair with MRO likely producing the dollars.
Pro Trading Room:
The Pro Room is Option Pit’s live access to Mark and myself during trading hours. Our Pro students post trade ideas with Mark and me during the entire trading session.
The Pro Room was closing more commodity oriented trades, as well as in the banks. For now, there is still weakness in all areas except for commodity plays:
Bto vxx mar11 26/28/30 cfly fills 0.26
Big Money Flow:
Mark was ringing the cash register Monday on a huge day. The BMF system working well in up or down markets.:
– Sell to close 3 of 5 Fluor Corp (Ticker: FLR) Apr14 22.5 Calls at $3.30 closed for a 84% gain
– Sell to close 3 of 5 International Game Tech (Ticker: IGT) Mar18 26 Puts at $2.50 for a 68% gain
– Sell to close 5 of 10 Southwestern Energy Inc (Ticker: SWN) Mar25 5.5 Calls for a 76% gain
– Sell to close 2 of 4 Pilgrims Pride Corp. (Ticker: PPC) Mar18 23 Puts for a 75% gain
– In Ares Capital Corp. (Ticker: ARCC) Mark sold half the 21 puts for a 40% return.
Rocking Day for The Flow!
Volatility Edge & Volatility Trading Club:
The Option Pit VIX Light Is Green, as the market for VIX futures is in full backwardation. SPX is still going up and down with around 2%+ moves per day.
To Your Trading Success,
AG