Yo, Pit Crazies,

As we eye the Fed this week, why are people buying short out-of-the-money calls?

And I mean way out-of-the-money calls.

LOOK AT THE BID FOR THOSE JUNK CALLS!

Call buyer in Procter and Gamble Inc (Ticker: PG)

Could it be that some traders are expecting some kind of wild upside move?

If the Fed pivots, how much could stocks rally in one day?

The Fed Pivot Will Be Huge … If It Happens

I don’t know to what degree the Fed will lower the pace of rate hikes this week.

It’s likely that with bond markets straining they slow down a bit, but say they can pick up later. If inflation is with us and the US government does nothing with fiscal policy, the Fed will send a friendly reminder in January.

The bid for PG calls is strange. Why bid up the strip of options from 130 to 150 in a consumer stock trading $135? Maybe someone thinks it can pop

I can only think of one reason a big stock like that can pop besides a takeover.

PIVOT.

I added a few binary switch trades in Vol Edge and Option Pit pro sessions yesterday. All should be revealed by Friday.

The Nov. 11 straddle in the SPDR S&P 500 Trust (Ticker SPY) is looking for a $16 move.  

As much as the big moves are exciting, I would like the Fed to be out of the economy micro managing business. They keep creating problems they need to fix later.

Check out Bill’s ebook on that … Call 1-888-872-3301 for your free copy.

The Rundown

SPYMaster

I closed a VIX/SPDR S&P500 Trust (Ticker SPY) pair for a 24% return yesterday. That pair was short SPY and short VIX and produced a decent return into a 5% rally in SPY.

Power Income Trader

Bill booked a 28% return in an Invesco QQQ Trust (Ticker: QQQ) put butterfly.

To Your Trading Success,

AG