Banks Still Not Feeling the Love

Andrew Giovinazzi

Yo Pit Crazies,

The secret to trading success is proper positioning.

How and why to put on a certain type of trade is all important when it comes to trading options. I have Griff in my ear about the banks, and I was surprised how low the IV was in the KBW Regional Bank ETF (Ticker: KRE).

Also, KRE is capable of making 10% moves over a 4 day period. That’s still moving, so the market is still in flux over how real the recovery is in financial markets.

KRE 3 month chart with 1 day candles and 20 day realized vol/ 30 day implied volatility

Volatility is a tradable asset. The big question is how to trade the asset.

Cheap IV or Moving Stocks … or Both

The idea here is to ride a wave until before it breaks and get off. Realized vol is that wave, I just don’t know which way it will break. So, I’m trading the vol more than the ETF.

KRE is still moving, and in two weeks the range is about 15%. The problem right now is that KRE does not hold a rally. If I’m trading this – which I may be – the answer would be some kind of strangle. KRE is moving so much that one side of the trade should easily pay for the other, maybe a lot more.

I’m also looking at Block Inc (Ticker: SQ). Financial stocks need to rally for SPX to get to 4500 so they should get caught up in the new Bull Market.

Stop into my webinar tomorrow at 7 p.m. ET and learn more about how to trade this new bull market.