More Ammo from Amazon

 

Hi Shoppers,

 

I think Amazon (Ticker: AMZN) is due for a pullback after its little run from a June 7 low of $3,172.20 up to its high on Friday of $3,366.58, a 6% move this week.

 

Friday’s candle could be a doji signaling a change in this mini uptrend:

 

 

Since AMZN trades over $3,000, there aren’t any low dollar amount options to be had.

 

So, if it opens lower on Monday, I will consider buying the June 18 3,285/3,225 put spread and pay around $6.50 or less.

 

The 3,285 calls have an implied volatility of 18.12 and the 3,325 calls implied volatility is 21.27.

 

Since AMZN is such a high priced stock ,this can move very quickly and these options expire Friday, so the decay will be massive if the stock doesn’t move.

 

I will be watching it closely.

 

 

I will take my losses if the spread trades down to $4.50 and begin profit taking at the $10-$11 level.

 

I know this is an expensive spread compared to what I usually recommend, so you just do fewer contracts.

 

Trade Review

 

      • I closed my Rocket Companies (Ticker: RKT) June 18 19.50-/29.89-strike call spread at $2.13 for a 104% win.
      • My FuelCell Energy (Ticker: FCEL) June 18 12-strike puts, I sold at $2.28 for a win of 101%.
      • In Plug Power (Ticker:PLUG) on Friday, the stock didn’t seem to want to go any lower. So I bailed on my puts at $2.13 for a 21% profit. Better to take the money than to let them turn into a loss. I can always re-enter!

 

Thanks for Reading … See You Next Tuesday!

 

Licia Leslie

Meme + Bitcoin: A Recipe for VIX

Liquidity, liquidity, liquidity.

 

Option Pit’s Bill Griffo will dive in on Thursday (and I’ll be there!), and he thinks we could see a mess related to new gold rules and its impacts on the U.S. dollar.

 

I agree.

 

I’ll give you a taste of it today …

 

Liquidity refreshment, if you will.

 

Just look at what a Bitcoin drop and a meme pop can do to the markets.

 

Liquidity got sapped up.

 

The secret is … there’s only so much to go around.

 

Lost in the Sauce 

 

When you go to McDonald’s, you don’t know what’s in the secret sauce on the Big Mac.

 

They call it a secret sauce because the marketing folks want to keep the Average Joe guessing.

 

When it comes to trading and liquidity, traders are not sure what other institutions, funds or banks are holding. They don’t know what’s in the current Market Sauce, as it were.

 

Right now Bitcoin/crypto and the meme stocks like AMC Entertainment (Ticker: AMC) are causing big dislocations because no one is sure what the leverage is behind these names.

 

Two-week VIX with one-day candles.

 

Note from yesterday, once Bitcoin started falling again and the meme stocks took off, VIX started to rise again in a mostly up market.  

 

Remember: VIX moving in an up equity market is a sign of short term stress.

 

The move could just be temporary, but it is still a move the wrong way for VIX. The issue is uncertainty — and that moved VIX higher, or at least stopped the freefall.

 

A VIX headed to 15 has stopped for now as the market assesses the fallout from BTC rout and the meme pop. (Meme Pop: The Trader’s Cola of Choice!)

 

Look for this liquidity subject on Thursday when Griff ties it all together with Big Daddy Dollar — and gold!

 

Make sure you register to attend!

 

The Lesson: Liquidity in one market can affect the liquidity of another. That’s kind of how liquid works in general.

 

The Rundown

Robinhood Trader:
Option Pit CEO Mark Sebastian uses the Robinhood Radar to find order flow in active names.

Mark still has the mojo rolling with the tweaks he made to the Robinhood Radar. 

      • Blackberry (Ticker: BB) is still producing, with gains of 113% in Memeland . Wendy’s (Ticker: WEN) popped up in Memeland on the Gamma Radar yesterday, so Mark is looking there.

 

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.

 

      • Ford (Ticker: F) stalled and I closed all of my long calls.  Looking at 50% returns and more there.  I do have some 13 puts that I will sell some puts against if F drops.
      • I am still riding the Ark Innovation ETF (Ticker: ARKK) strangle with the ARKK June 18 116-strike calls for ARKK to match last week’s highs.

 

Sharp Bets:
Mark Sebastian runs our marquee long option strategy for a once-per-week trade. SB specializes in low-implied volatility calls and puts, and managing trade size for a risk-adjusted options portfolio.

Mark added a buy of Energy Transfer LP (Ticker: ET) July 23 11-strike calls for $.45.  Nice-risk reward here. 

 

Pro Trading Room:
This 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 tone was mostly cautious into Tuesday’s close.

 

Some ideas from around the room:

 

      • Buy WEN July 28-35 call spread for $.95. This trade was closed same day up 58%.
      • STO DraftKings (Ticker: DKNG) Nov. 40/25 puts at $2.15
      • STO  Energy Transfer Partners (Ticker: ET) Jan. 22 9/5 puts. BTO July 23 11-strike calls for a $.05 credit
      • Workhorse (Ticker: WKHS) is getting in on the (meme) party too, I guess.  Traders are  looking at more upside in there.

Volatility Edge/Volatility Trading Club:

The Option Pit VIX Light is still red, and the Cboe S&P 500 9-Day Volatility Index (VIX9D) made COVID-era lows. I am still learning short VIX delta here.

 

Mark closed trade #No. 93 for a 20% and No. 83 for a 35% gain this week. At this point Vol Edge is red and leaning short delta, but he does own a few cheap upside call spreads in VIX.

 

For the Volatility Trading Club, I added a VXX strangle (long a call spread and long a put) in the July 02 cycle, leaning short deltas. I have some puts I can close in VIX June 16 19-strike series, but VIX has just been hanging at the current levels due to the issues I outlined above.

 

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

The Trade to Make a Difference Next Week

Hey There Income Hunters,

We have a big week coming up, especially after yesterday’s hourly earnings number that was up double over consensus.

Workers are needed badly and employers are paying up.

This Thursday, I expect another strong consumer price index (CPI), possibly reaching 5%.

Treasury Secretary Janet Yellen will also be auctioning plenty of bonds:

      • $58 billion 3-year notes on Tuesday
      • $38 billion 10-year notes on Wednesday
      • $24 billion 30-year bonds on Thursday

That’s $120 billion of supply heading into CPI, and last month CPI was a shockingly strong number causing a smackdown of TLT…

Coincidently, the US 10-year yield and the iShares 20 Plus Year Treasury Bond ETF (Ticker: TLT) are almost exactly where they were in May heading into the auctions and CPI:

Let’s take a look at the ideal trade to capitalize on the volatility next week …

TLT Put Spreads Expiring Friday June 11

Last month, TLT dropped $5 the week of the auctions and CPI. The auction was mediocre, while the CPI was a shockingly high number of 4.2%.

Monday is the day to put on a 139.5/137.5 put spread …

The max loss is $54, compared to a top-end profit of $146, for a 270% return. The probabilities are we get to 137.5, and if we do just take the profits.

Last Time Around

Check out the TLT graph highlighting the week of May 7 below …

 

 

Now check out the TLT spreads I put on last month. This week, it’s dé·jà vu all over again.

I held two of the three spreads through expiry, and I captured the maximum $200 gross income.

The ability to let the spreads unwind naturally through expiry is a major benefit. Let me explain …

When the underlying stock settles above the higher strike of a call spread or below the lower strike of a put spread, this is how it unwinds:

Call Spread

      • The lower strike, which you’re long, you exercise and take delivery of the underlying.
      • The higher strike, which you’re short, is assigned to a long and you deliver the underlying.
      • In summary, you have zero position, did not pay any commissions through the process and have maximized your return on the trade.

Put Spread

      • The lower strike, which you’re short, is assigned to a long and you take delivery of the underlying.
      • The higher strike, which you’re long, you exercise and you deliver the underlying.
      • In summary, you have zero position, did not pay any commissions through the process and have maximized your return on the trade.
      • Bring It Home

As #IncomeHunters our job is to ascertain the probabilities of a trade opportunity working in our favor.

Recently, as the supply of US Treasuries has increased, the second week of the month has presented an excellent opportunity to reap good rewards by holding a bearish strategy in TLT.

The vertical option spread is a very efficient way to express that strategy.

We have a big week coming up — including a couple of live events (more on those to come)!

Until then …

Live and Trade With Passion My Friends,

Griff

Licia Leslie’s Trading Record

Here you can view Licia Leslie, Option Pit's unique option finder's trading record.

Entry Date Underlying Buy Sell Expiration Strike Outlay Dollar P&L Percentage P&L  
                   
5/5/21 TDOC 2   May21 162.50/182.50 call spreads 720 -300 -41  
4/28/21 SPY 5   Apr30 417.5/412.5 put spreads 600 -350 -58  
4/26/21 PTON 4   Apr30 102/108 call spread 800 -800 -100  
4/22/21 ORCL 8   May21 75 puts 960 -152 -15  
4/22/21 XPEV 4   May21 32.5/40 call spread 800 -440 -55  
4/19/21 GDX 10   Apr23 36 calls 550 -200 -36  
4/19/21 SPY 6   Apr21 415 puts 648 617 95  
4/13/21 FB 4   Apr16 310/300 put spread 840 1100 130  
4/7/21 EBAY 8   Apr16 62 puts 840 -224 -26  
3/24/21 PEP 6   Apr16 139/134 put spread 900 -300 -30  
3/22/21 TGT 6   Apr16 190/195 call spreads 900 870 96  
3/15/21 TSM 1   Oct16/Apr16 120/130 call diagonal 1035 -130 -12 OPEN
4/23/21 TSM   1 May21 125 call 189     OPEN
3/15/21 AMD 2   Apr16 82.50/97.50 call spreads 620 -260 -41  
3/10/21 AMC 6   Mar19 10/15 call spread 660 660 100  
3/10/21 PENN 2   Mar19 118/128 call spreads 640 660 103  
3/1/21 AMD 5   Mar19 85/90 call spreads 875 -325 -37  
2/17/21 REV 5   Mar19 12.5/17.5 call spreads 700 -200 -28  
2/17/21 BP 8   Mar19 23 calls 840 520 61  
2/1/21 WFC 10   Feb19 29 puts 760 -360 -47  
1/26/21 SPY 5   Feb5 381/371 put spreads 825 1145 138  
1/19/21 TWTR   4 Feb12 44/30 put spreads -944 524 55  
1/11/21 SLV 10   Mar19 23.5/25 call spreads 500 470 94  
1/2/21 DIS 4   Feb19 165/150 put spreads 800 260 32  
12/21/20 FDX   3 Jan15 250/200 put spread -720 -180 -25  
12/11/20 HD   1 Jan15 245/200 put spread -300 216 72  
11/1/20 ETSY 3   Dec4 162.5/170 call spreads 630 -195 -30  
11/23/20 GM 5   Dec18 44/48 call spreads 500 350 70  
11/19/20 SPY 3   Nov20 355/350 put spreads 345 156 45  
11/12/20 PINS 5   Nov20 62/67 call spreads 425 315 74  
11/4/20 UBER 4   Nov20 41/36 put spreads 600 -160 -26  
11/3/20 SPY 1   Nov6 345/350 call spread 100 150 150  
10/28/20 BIIB   1 Nov20 230 put 1900 1790 94  
10/25/20 SNAP 5   Nov20 44.5/50 call spreads 700 -175 -25  
10/20/20 BBBY 5   Nov27 26/30 call spreads 550 -175 -31  
10/17/20 AMGN 5   Nov20 155/170 call spreads 825 -500 -60  
10/16/20 TLT 5   Nov20 161/156 put spreads 740 285 38  
10/12/20 NKE 4   Nov20 125/115 put spreads 776 504 65  
10/8/20 SLV 5   Nov20 22/26 call spreads 530 254 47  
10/6/20 CAT 1   Nov20 170/185 call spread 174 91 52  
10/2/20 PENN 1   Nov20 65/50 put spread 420 -45 -10  
10/2/20 FSLR 1   Nov20 72.50/87.5 call spread 270 110 40  

The 10-Year Repo Squeeze That Wasn’t

<iframe src=”https://player.vimeo.com/video/520364843″ width=”640″ height=”564″ frameborder=”0″ allow=”autoplay; fullscreen” allowfullscreen></iframe> Hey There Income Hunters,   Well the banks tried to pull a fast one — and it failed even harder than the 10-year Treasury debacle this week.   The banks also don’t seem to realize that Fed Chairman Jerome Powell is no longer calling the shots …   There’s a new sheriff in town and her name is Janet Yellen…    Everyone was so distracted by this fake 10-year squeeze that the big news out of the WSJ Jobs Summit went relatively unnoticed…   This weekend’s whiteboard review will show you the inside scoop on the 10-year repo trade and why the “Fed Put” is officially dead — and it’s now a “Yellen Put.”   Plus I’ll show you what REALLY hurt the stocks and bonds this week …   Check it out right here …   Live and Trade With Passion My Friends,   Griff  

Weekly Roundup – Stimulus, Crypto, COVID and Trading

Hey Influence Traders,

Its the weekend, which means its time for the Weekly Roundup.

I had a busy week — after returning from the slopes I made a #PowerMove to DC to see some of my inside sources face-to-face …

The Highlights

  • The weather has calmed down … the fallout from GameStop has not.

  • Bonds were on the move; stocks were flat.

  • Cryptos did an about face from the prior week.

  • And Friday was a busy news day:

    • Johnson & Johnsons (Ticker: JNJ) vaccine was greenlit by F.D.A. advisers.

    • The SEC suspended trading in 15 securities because of questionable trading and social media activity.”

DC Action

This week was not as slow as last week on the confirmation front.

Folks in DC actually got to work … if only slightly.

Confirmations

  • Secretary of Energy: Jennifer Granholm was confirmed. She is a former two-term governor of Michigan who has experience in dealing with the auto industry. She should help Biden’s push to rollout electric vehicles and EV charging stations.

  • Secretary of Agriculture: Tom Vilsack was confirmed. He is a DC insider, having served as Agriculture secretary for eight years under Obama. Biden views him as instrumental to tackle the hunger and farm crises that have been exacerbated by the pandemic.

  • US Ambassador to the United Nations: Linda Thomas-Greenfield was confirmed. She is a 35 year foreign service veteran.

The nomination of Neera Tanden, Biden’s pick to lead the Office of Management and Budget, is in deep peril after Democratic Sen. Manchin and a slew of Republicans signaled they wouldn’t support her.

Contentious Upcoming Confirmation Hearings
Interior Secretary nominee Deb Haaland’s confirmation hearing is coming up this week, which will be contentious given her opposition to fossil fuels.

Department of Health and Human Services nominee Xavier Becerra’s confirmation is in jeopardy, given his support of Obamacare.

COVID Relief Bill
Some substance … a lot of pork!

The House Budget Committee unveiled the details of its $1.9 Trillion COVID relief bill, which includes:

  • $422b in direct payments: $1,400 per person, with the payments phasing out for those with higher incomes ($75,000 for a single person and couples making more than $150,000).

  • $246b in additional jobless assistance: the bill will extend jobless benefits until the end of August and boost the weekly amount received by workers through state unemployment programs by $400.

  • $120b in support for parents: parents of children under the age of 18 will get monthly benefits worth $250-$300, depending on age, for one year.

  • $70b for Covid-19 tests and vaccines.

  • $170b in school reopening funds.

  • $110b in business support, including grants for small businesses.

  • $55b for paid leave and health insurance.

The bill immediately drew fire for some questionable spending priorities unrelated to COVID relief:

  • $350b for local governments, which the Republicans immediately branded as a handout to primarily Democratic states.

  • $300 million for the Agriculture Department to “conduct monitoring and surveillance of susceptible animals for incidence of SARS–CoV–2.”

  • $135 million to the National Endowment for the Arts, $135 million to the National Endowment of the Humanities and $200 million to the Institute of Museum and Library Services

  • $750 million for “the Director of the Centers for Disease Control and Prevention to combat SARS–CoV– 2, COVID–19, and other emerging infectious disease threats globally.

  • $500 million “to support public health data surveillance and analytics infrastructure modernization initiatives at the Centers for Disease Control and Prevention.”

  • $15 billion to the airlines industry, which was controversially bailed out in the first stimulus.

One thing that did not make it into the bill was the raising of the minimum wage. A Senate arbiter ruled it must be removed from the COVID package for procedural reasons.

US Critical Supply Chains

President Biden signed an executive order requiring his administration to review critical supply chains with the aim of bolstering American manufacturing, including for semiconductors and critical rare earth.

Automakers have been forced to halt production because of a lack of computer chips.

Health care workers are short masks.

Pharmaceutical executives have voiced concerns that critical drugs could dry up because foreign countries are stockpiling key ingredients.

China has been vocal about using its rare earth dominance as an economic weapon against other nations.

Power Mover of the Week

My winner is Johnson & Johnson (Ticker: JNJ) because its COVID vaccine was greenlit by the FDA and distribution is expected within days.

It will be the third shot made available to the United States and the first vaccine to require just one dose instead of two.

JNJ’s stock price got a nice little after-hour’s pop on Friday.

Power Loser of the Week

The 18%+ drop in the price of BTC this week made it a contender, particularly since many people piled in over the past few weeks!

But my Power Loser(s) of the week are velocity day traders.

On Friday, SEC suspended trading in 15 securities because of questionable trading and social media activity”:

  • Bebida Beverage (Ticker: BBDA)

  • Blue Sphere (Ticker: BLSP)

  • Ehouse Global (Ticker: EHOS)

  • Eventure Interactive (Ticker: EVTI)

  • Eyes on the Go (Ticker: AXCG)

  • Green Energy Enterprises (Ticker: GYOG)

  • Helix Wind (Ticker: HLXW)

  • International Power Group (Ticker: IPWG)

  • Marani Brands (Ticker: MRIB)

  • MediaTechnics (Ticker: MEDT)

  • NetTalk.com (Ticker: NTLK)

  • Patten Energy Solutions Group (Ticker: PTTN)

  • PTA Holdings (Ticker: PTAH)

  • Universal Apparel & Textile (Ticker: DKGR)

  • Wisdom Homes of America (Ticker: WOFA)

The SEC has the power to suspend trading for up to 10 days in any security.

The agency said it did so as part of its continuing effort to respond to potential attempts to exploit investors during the recent market volatility.”

The SEC is trying to prevent the artificial inflation of stock prices through social media.

While the SEC and other regulators did not come down on the little guys who moved GameStop, they don’t have an appetite to see such #PowerMoves in the future.

Cutting Through the Noise for You.

Frank

Game Stopped? More Like Game ON!



Hey There Income Hunters, 

A big nothingburger at this week’s GameStop (Ticker: GME) hearing …

It was basically the guys who control the rigged “Wall Street Casino” crying because someone beat them at their own game.

In other words, they were sad because the house, for once, DIDN’T win.

Just think about how the Fed and the banks have been doing the same thing over the past 40-year. In their case, they’ve been playing all Americans by devaluing our money to better themselves …

Plus, they had a bit of an advantage … they were able to print as much money as needed so they couldn’t lose!

On the Gaming Floor
I, for one, salute the Reddit retail trading champs …

And go absolutely nuts with the chest-bumping and and the high-fiving every time they win.

And go nuts with the chest-bumping and and the high-fiving every time they win.

Now, for me, the seasoned pro over at the blackjack table, the reflation trade had a bad week.

But I’ll explain why (and why bad times won’t last) and show you a good non-reflation trade play ….

The Death of Bonds…
Bonds got their butts kicked this week because inflation is rearing its ugly head.

That is great news for gold longer-term. However, gold is patient and will not get all bulled up until inflation spikes higher …

So I went to work with the Power Income Valuation Model (PiVM) to lock in on a non-inflation trade …

And, look, week-in and week-out, Power Income readers are receiving awesome picks (for the near-term and longer-term) … just by reading.

Stick with me folks, we have some big things planned for the months ahead.

My Proprietary Pick
My latest non-inflation play is British American Tobacco PLC (Ticker: BTI).

BTI is trading at 36.27, a 30% discount to $51.79. Let’s see how it looks in my proprietary PiVM model …

  • Those numbers are very nice, and you should also know BTI is a great income stock, with an almost 8% yield.

  • The 69.6% payout ratio tells you they only use 70% of earnings to cover dividends and the 6.5% growth rate of dividend is excellent. 

  • Combine the growth and dividend yield to see total return … 14.5% is awesome with bond rates so low.

  • This is the type of stock you build generational wealth on.

  • I am buying it outright and selling the 40 June calls at .60 just to get a little extra income…

Bring It Home
OK, so I was licking my wounds yesterday …

Then I started to realize that, yes, the reflation trade is bleeding money — but we are seeing inflation numbers rise and gold just doesn’t get ahead of itself.

This is when you have to find a way to stay in the game…

So, I sold covered calls against these positions:

  • First Majestic Silver (AG) sold Mar-19 19 strike calls at 1.07

  • Anglo Gold Ashanti (AU) sold Mar-19 22 Strike calls at .81

  • B2Gold Corp. (BTG) sold Jan 22 7.5 strike call at .57

(Quick Income Hunter Note: A covered call is when you have a position in underlying shares and you sell a call option on that particular stock above its current price 

You immediately receive the premium that you sold the call option at …  and if the stock expires above the strike then you close the position and keep the premium plus any profit on the sale.)

My other positions are call spreads …  

  • Enbridge Inc (ENB)

  • Barracks Gold (GOLD)

  • Sandstorm Gold (SAND)

  • SLV

  • Total (TOT)

I am down right now, but I am VERY confident we are on the right track with inflation coming later this year thanks to massive stimulus.

Bottom line: this portfolio will bag MULTIPLE victories by year’s end.

Here’s to a great weekend and as always …

Live and Trade With Passion My Friends,

Griff