BY ANDREW GIOVINAZZI
July 3, 2024
Yo Pit Crazies,
Something for nothing you can claim a crazy voucher from Option Pit for this 4th. Click here to grab it and check out all the things on tap for the 2nd half of 2024.
For the most part stocks are stuck until the NFP number. It is an annoying but real artifact of this market that traders wait for big USGOV numbers to make larger moves. This is a quiet holiday week so SPX is kind of stuck although we did manage 50 point trough to peak moves from Monday.
One stock that is moving is Tesla Inc (Ticker: TSLA). TSLA deliveries are strong and folks are looking at the only AI stock down for the year.
5 day TSLA chart
You want a low cost way to play it?
This is what we did in the Trading Desk today.
I used a ratio of call butterflies and puts
I wanted a nice risk reward ratio and the upside calls were very expensive. This sets up well for a butterfly trade. The idea is to double upside against 1 put. If TSLA does fall out of bed, I should at least break even or make small like $100 per trade/
Buy to open 2 TSLA Jul19 240/260/280 call butterflies for 2.35
When filled
Buy to open 1 TSLA Jul19 210 puts for 2.76
470 + 276 = 746
What I like about the trade is the risk reward setup. The chance to make $3000 but only risk $100. If the momentum does not continue through Friday, I will kill it and move on.
30-1 risk reward is not a bad setup.
To Your Trading Success,
AG
Andrew Giovinazzi
30-Year Trading Pro
See what's hot at option pit
CAPITOL GAINS: SMR Aug16 7 call closed for a 150% gain
DELTA STRIKE: VLY Mar15 8 puts closed for a 88% gain
PFE May17 26 calls closed for a 66% win
OP MENTORING: SPY Mar22/19 510 put calendars and 520 calls for 6.4% gain
OPTION SHOPPER: ERX Mar28 65 calls closed for a 90% gain
Events make the liquidity providers raise prices for the same amount of time
How do I know this? I was one for 15 years, Mark 10 years and Licia for 15 years. That is 40 years and 20 million option contracts. Also, players will wait to place trades while an event is in play. Traders would rather ride a sure wave than place a big bet prior.
The liquidity provider will just pump up the volatility in the options to overcome the daily decay. Trade 1 Greek for another, Theta and Vega. That is just time for volatility.
Look for my Greek Exposition in Option Pit University coming soon.
If the PCE number is just in line post-debate, SPX will fly as the market is waiting for a reason to go higher. Hard to imagine there will be any surprise from the two candidates but that is why the VIX has a bid!
To Your Trading Success,
AG
The Gulf of Maine and the shoreline offer 1000s of fishing spots. An almost unlimited supply of places to go. Right now the stock market, with 1000’s of names to trade, has only one place to go.
That stock is Nvidia Inc. (Ticker: NVDA). On a low volume Tuesday in the June heat, NVDA managed a day where the fund manager had a chance to buy the stock not at all time highs. So they all jumped in and the performance lifted all high quality tech.
Yo Pit Crazies,
It is Voz Free Friday this week. Check out Voz and Mark as the dynamic duo of trading on the close every day in Trade to Close.
My close Tuesday was a bit different, a buddy wanted to go Striper fishing so I did this: