Ain’t No Stopping the ‘Rona — This Stock

Yo Pit Crazies,

Here in Maine, they don’t call it the Coronavirus or Covid-19.

They call it The ‘Rona.

And I think the markets are trying to figure out how long we have to deal with it.

One company should do well regardless … and it will most likely be my first new Capitol Gains trade idea.

Click here for access to our live event today at 11 a.m. EST where we’ll discuss all of that.

Read on for an early glimpse into that process.

The Right Pfit

Since Delta variant is in the news, I’m using one of the names that I have traded in and out of during the pandemic: Pfizer (Ticker: PFE).

I own shares as a great income producer, but it has been a decent option trade as well.

Frank covered this in June.

For Capitol Gains there are activity funnels I watch:

      • Frank’s Deep Info: How hot is the story, actually?
      • Stock and Option Liquidity (volume, activity, skew).
      • Price Movement: Key actions in a stock that create either a short term trade or a long term trade.
      • Realized Volatility: How much is the stock moving to support my option trade.  
      • Implied Volatility: How to use the option prices to create the best risk reward factors.

While I will not go into all the details here — you have to come to the event today for that! — two key items crossed over for me:

      • Very low implied volatility
      • 52-week high for PFE

Once I see that action, I price a long strangle for >30 day hold time since the IV is so low.

I came up with this idea:

      • PFE buy-to-open four PFE Sept. 17 44-strike calls for $1.20. Buy-to-open four PFE Sept. 17 41-strike puts for $.30

1 year price chart of PFE with 1 day candles and 30 day IV on the bottom chart

Drop into our Capitol Gains event today at 11 a.m. EST for more on this.

The Rundown

Pro Trading Room:
The Pro Room is Option Pit’s live access to Mark and myself during trading hours. Our Pro students post trade ideas with Mark and me during the entire trading session. 

The Pro Room still making it work:

      •  Jason F. closed some Nvidia (Ticker: NVDA) Aug. 06 180/175 puts for $.09, +87%
      • Cat did a little bottom fishing in Marathon Patent Group (Ticker: MARA): sell-to-open $MARA Aug. 6 28 puts for $.93

Trading Legion:
The Trading Legion is an intermediate-level education and a long strangle trading vehicle. The goal is to teach students the best times to buy options.

      • I subbed for Griff in the Monday session and this is the macro idea I came up with filled prices from Jason in the Chat Room

        • Buy-to-open iShares Barclays 20+ year Treasury Bond ETF (Ticker: TLT) Aug. 13/27 148 puts for $.63. Buy-to-open Technology Select Sector SPDR Fund (Ticker: XLK) Aug. 27 150-strike put for $1.50. Five put calendars to one XLK put.

Volatility Edge & Volatility Trading Club:

Volatility Edge is run by Mark and uses the proprietary Option Pit VIX Light indicator to guide volatility trading. The Vol Trade Club is run by me (AG), and employs a long strangle strategy that seeks to use VIX future decay to pay for upside VIX, VXX and UVXY options.

The Option Pit VIX Light Is Red. VVIX is still above 100 and VIX rallied a bit but is dead stuck.

      • The Delta variant killed any move in VIX today. Stay tuned!

Remember, a lot of vol strategies I use are market neutral. That means whether SPX or VIX go up or down, the positions still make money. This is a technique you can learn in the Volatility Trading Club and Volatility Edge!

To Your Trading Success,

AG

 

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