Yo, Pit Crazies,

 

Over the weekend here in Option Pit Exclusive and my Sunday Vol Man column in The Pit Stop newsletter, you would have read that I noticed the huge markdown in long-term IV in most major stocks.

 

Generally IV drops go before the rally, so even with Monday’s selloff from recent highs I am not too worried.

 

At least in my state – the Great State of Maine – there are more help wanted signs and more ads for employment on the radio than for anything else. The point is, the labor market is still very tight and that is not the stuff of recession. 

 

Labor was getting tight in 2020 before states and Uncle Sam paid people to stay home. That should unwind eventually, especially as President Biden announced the end of the Covid-19 and public health emergencies set for May 11.

 

As I am reminded often, cities were made by bulls in this country and there was a little bullish flow on Monday.

 

Let’s check it out!

 

The Animal Spirits Are Hungry

Now there is call buying and then there is call buying. 

 

I have to admit I tried to buy some March calls mid-market in ConAgra Foods Inc. (Ticker: CAG), but traders would not sell them to me.

 

The market dropped all day and still they would not sell them!

 

Note below traders piled into five-day calls paying .10 and .15 for out-of-the-money options.

 

 

I think traders are taking cheap shots at a positive FOMC meeting report. My guess is that the Fed says they are raising .25 basis point and will do so again at the next meeting. These cheap value stocks look awfully tempting for a short-term pop.

 

This is the kind of flow Mark and I look for in Big Money Flow.

 

We have two days to see if there is any action!

 

The Rundown

The EasyButton

I closed a Ford Motor Co. (Ticker: F) call calendar for a 23% gain today to get EZB on the board.

 

Big Money Flow

Mark closed the American Airlines Co. (Ticker: AAL) Jan27 16.5 puts closed for a 56% gain.

To Your Trading Success,

AG