Every week is a subject for monster moves now

BY ANDREW GIOVINAZZI

February 20, 2024

Yo Pit Crazies,

If you are not part of the Trade Zone, do so here. Also check out our weekly YouTube special with Mark, Licia and myself on our YouTube page.

Some of you may know, maybe not, that I was a floor trader for 15 years prior to joining Mark at Option Pit. During that time, I taught floor traders how to trade for Group One, LTD, owned a seat and ran my own trading firm with 3 partners.

Now I live a relatively quiet life on the coast of Maine teaching motivated retail traders all the tricks I have acquired over the last 30+ years. A trick right now is that US GOV and related entities have made the stock market an appendage of US government monetary policy. That makes every policy or data announcement similar to an earnings event.

For nearly 20 years of trading I can remember one time the Federal Reserve did something that mattered and that was the bailout of the Mexican Peso in the early 1990’s. Telephones De México (Ticker: TMX) was the hottest trading stock on the Cboe floor and it went south when Mexico went the Mexican currency situation went south. That started a long history of Fed enabling equities with monetary policy culminating in the Quantitative Easing during 2009-2016 and again in 2020-2022.

This week the USGOV auctions bonds and the Federal Reserve opines on rates. I find the Bloomberg Calendar helpful in navigating the endless data announcements and events.

Once again, there is a trade for this.

Vol Curves Flatten, Expect Bigger Market Moves

Below is the VIX curve with almost a full term to expiration. Normally the market expects more to happen in the future than right now. The flatter the curve is in the front, the more the market expects fireworks right now. I discuss how to price this in Pro, Trading Desk and OP Mentoring. It is the basic strategy for Weekly Profits Cycles.

Closing VIX curve on Friday, Feb 16th

I describe my trade setup below talking to Longo in the Vol Views podcast. I liked it so much I put it on in pretty good size as a RIFF for my Weekly Profits Cycle class. I put on all trades I post for my trading products so when I win, my students win and it is a hallmark of Option Pit Trading.

Check out my appearance on Volatility Views.

Every market has its own rhythm and right now AI chips are taking all the oxygen. Fed rate opinions are another. This week we have both. I like long SPY, long VIX as a pair holding to Friday the 23rd at least.

Once again buckle the seat belts.

To Your Trading Success,

-AG