Ripples, Ripples, Ripples — and Lessons

Hey Influence Traders,

Both K Street and Wall Street are making ripples this week ….

– The Senate confirmed and denied multiple candidates for Biden’s key posts

– The Senate is working to get the next relief bill passed

– The markets are moving … in all directions

– RIPPLES ARE FORMING

Elsewhere, in “it’s sometimes better to stay off radar screen” news, Redditor Roaring Kitty had his FINRA licenses revoked!

As it turns out, Keith Gill, the central and now legendary figure in the RobbinHood/Reddit insurrection that led to the rise of GameStop shares (sounds like part of a Star Wars trilogy), worked with MML Investors Securities, a broker/dealer subsidiary of MassMutual (he is no longer employed by MML).

Apparently, he forgot to list his outside business foray with MML … a NO NO in the registered world.

To sum up — in the past few weeks Gill has been nailed by a class action lawsuit, lost his job, and lost his securities licenses – LESSON LEARNED!

Confirmed … Waiting … Denied

It’s time to play everyone’s favorite new party game, Confirmed! … Waiting! … Denied!

Among Biden’s 23 nominees with Cabinet rank, just 13 have been confirmed by the Senate, which is one of the slowest confirmation starts in recent presidential history.

Confirmed: But this week the Senate did confirm three key nominations, all of whom control substantial budgets and can move ripples.

Secretary of Commerce: The Senate confirmed Gina Raimondo by a vote of 84-15.

Raimondo, whose name was floated as a V.P. candidate, was the first female governor of Rhode Island and formerly served as its elected general treasurer. She is considered to have a sound business acumen, having co-founded Point Judith Capital, an early-stage venture capital firm.

She will head a massive department that works to promote job creation and economic growth across the country.

She will certainly have influence over where money is spent, particularly when the administration puts forth its infrastructure spending bill.

Council of Economic Advisers Chair: The Senate confirmed Cecilia Rouse by a vote of 95-4.

Rouse, a labor economist and dean of the Princeton School of Public and International Affairs, previously served as a member of President Barack Obama’s Council of Economic Advisers and worked for President Bill Clinton’s National Economic Council.

She is expected to be a big advocate for unionizing the workforce. Ohio Democratic Sen. Sherrod Brown, the chairman of the Senate Banking Committee, noted that, “For too long, American workers haven’t had anyone on their side in the White House. That ends now."

In addition to Rouse, Jared Bernstein, Biden’s chief economist when he was V.P., and Heather Boushey, co-founder of the left-leaning Washington Center for Equitable Growth, will serve as members on the CEA.

Secretary of Education: The Senate confirmed Miguel Cardona by a vote of 64-33.

Cardona, a former public school teacher, will be tasked with squaring off with teachers’ unions to negotiate a return to in-person instructions. Many teachers’ unions are fighting reopening plans, but President Biden has pledged to reopen schools by May.

To accomplish his reopening plans, Biden is pushing Congress to approve another $170 billion in education funding, the disbursement of which Cardona will control.

On top of the looming reopening fight, Cardona is facing mounting pressure from the progressive wing of the Dem party to broadly cancel some or all student loan debt. While most in DC agree that canceling debt will require Congressional action, some on the Hill, including Elizabeth Warren, have argued that Cardona can unilaterally act.

Waiting: California Attorney General Xavier Becerra, Biden’s nominee to lead the Department of Health and Human Services, will be voted on this week.

Becerra is expected to receive easy confirmation … but that’s where the easy part stops.

A laundry list of issues have been building up at HHS that will require Becerra’s immediate attention. These include everything from the oversight of hospitals, health care companies and nursing homes during the pandemic to issues surrounding drug pricing, telemedicine and child care services.

Moving on these issues will certainly have an impact on the health and pharmaceutical sectors.

In addition to HHS, the Department of Justice, the Department of Housing and Urban Development, and the Small Business Administration are all waiting for leadership positions to be filled.

All of these departments will play pivotal roles in disseminating the money that will be handed out in the $1.9 trillion coronavirus aid bill. A lack of leadership could lead to a disjointed rollout.

The delays in confirming top posts also mean delays in confirming and seating deputy secretaries and undersecretaries, who are often the ones to actually implement major policy.

Denied: Biden’s cabinet was thrown a curveball when Neera Tanden, his nominee to lead the White House budget office, was forced to withdraw her name from consideration after her nomination faced opposition from both sides of the aisle.

Tanden led the left-leaning think tank Center for American Progress for a decade, during which she gained a reputation as a partisan who frequently targeted Republican lawmakers on Twitter and feuded with progressives including Sen. Bernie Sanders.

LESSON LEARNED – DON’T TWEET ABOUT PEOPLE WHO WILL ONE DATE VOTE TO DECIDE YOUR FATE

Tanden’s withdrawal raises questions about the Biden administration’s budget process since the White House has yet to offer a timeline for releasing its budget.

Most recent presidents submitted written budgets to Congress by the end of February, though Trump didn’t submit his until mid-March.

Relief Bill in the Works

The U.S. Government has unrivaled power to move markets … and it is about to act.

The Senate has been working hard to get the next COVID relief bill passed, including cutting out some pork to appease Republicans.

The original bill that was passed by the House included $1.425 billion in funding to help with transit rail capital projects, including the extension of the Bay Area Rapid Transit line from San Jose to Santa Clara, California.

The House leadership agreed to yank that Pelosi pet project out of the bill.

When the bill passes, money will start to move to some sectors, but not others, and the next stimulus might leave some Americans out.

To try and get the bill passed, Senate Democrats reached a deal with President Biden to limit the eligibility for the proposed $1,400 per person stimulus checks.

The checks will phase out entirely at $80,000 for individuals, as opposed to $100,000 in the version passed by the House, and $160,000 for joint filers. The change could mean many Americans who could have received at least some payment will now receive none.

This change will impact the anticipated impact of discretionary spending the market has been pricing into the relief bill. This could also mean a little less capital flowing into stocks.

Union Windfall

One group that will benefit from the bill is unionized workers.

Early this week, President Biden threw his support behind Amazon workers in Bessemer, Alabama, who have begun voting on whether to join the Retail Wholesale and Department Store Union (RWDSU).

It appears that the Hill is ready to throw some money behind those efforts. The Senate ruled that Congress can include a fix for the $81.2 billion union pension funding crisis as part of the COVID bill.

There are about 1,400 pension plans that cover about 10 million active and retired union workers.

Those plans hold $496 billion in assets but face $1.2 trillion in liabilities.

The administration is committed to pushing unionization. This move will shore up union finances and help make unions more popular with past, current and prospective workers. 

Such money will also alleviate potential financial burdens on employers, effectively buying them off and easing push back on unionization attempts.

Markets React

Some sectors are on the rise – including energy and EV stocks.

Automakers are taking it on the chin due to a microchip shortage.

Interestingly, Tesla (Ticker:TSLA), even with its recent pullback, still has a higher market cap than the 23 companies that make up the S&P 500 energy sector combined.

Bond prices continue to fall sending yields higher, which impacts borrowing costs in global debt markets and could impact multinational companies.


And the major cryptos, Bitcoin (Ticker: BTC) and Ethereum (Ticker: ETH) are inching back up after seeing a pullback last week.

More to come on all these topics as the week’s events begin to settle into the markets.

Cutting Through the Noise for You,

Frank


Is This Meme Stock About to Go Bust?

Hey Traders,


Since meme stocks started blowing up, I have put on winner after winner in our Robinhood Trader program (AMC, NOK, BB) …


Same in our Trading Legion mentoring service, where we put together a sweet RKT trade yesterday during our OP Markets Show.


I keep waiting for the bottom to drop out on some of these names but, NOK aside, we haven’t seen that yet.


However!


Could that be changing?


Check out this MONSTER trade in BB on Tuesday …


A customer bought at least 100,000 of the BB March 12th expiry 5 puts for, get this


Two cents.



This trade was 100% opening, as the open interest on this strike before yesterday was only 338 contracts.


So why would someone spend $200,000 to buy 100,000 2-cent puts?


Are they expecting the stock to tank?


In a perfect world (for this trader), maybe …


But they are more likely looking for a swift move downward.


This inexpensive bet does NOT need a lot of movement down to become profitable.


Check out the profit/loss curve …



What this tells us is that without any other help, the trader needs BB to drop to below $8 by Monday for the trade to win.


But … what if during the drop implied volatility explodes again?


If BB drops to $8 and the implied volatility of the options goes up 50%, guess how much money this trader makes:



Almost 1.2 million dollars …


That would be six-times his or her money on risk.


If the stock keeps going, they can make even more money.


This is the type of longshot trade that either is …


  • A trader making a crazy, calculated bet based on risk (essentially having a budget to go play at the Vegas slot machines)

  • OR … it’s a trader who knows something others don’t


My gut says it is the latter …


Still, though.


There are probably better ways to play this than the Mar12 5 puts.


The 8 puts only cost 7 cents, for goodness sake.


That is a MUCH better play than the 5 puts…


But sometimes these guys have their minds made up where they think a stock is going — and they choose to maximize their leverage.


The 5 puts are certainly doing that.


This is definitely one to keep an eye on ..


And set up a trade in Robinhood Trader based on this flow (and some other paper that printed).


Your Only Option,


Mark Sebastian

TODAY: Turn the Key on Profits at the Open

Hey There Income Hunters,

Can you hear that?

I am REVVED up about Ford (Ticker: F).

I’ve been looking for a good consumer discretionary stock to buy that can capitalize on the massive growth spurt the economy will see when it reopens in the coming months …

Speaking of, can you BELIEVE Texas has been declared “100% open”!?!

They love Ford down there, too.

Have You Driven A Ford Lately?

Ford has  been rallying — but I believe it’s still undervalued in the sector …

So I checked the technicals on it and, lo and behold, one of my go-to technical indicators revealed a bearish signal …

So like any aggressive trader I thought, “Great! I’ll sell now and buy it later.”

You may want to ride with me on this one … If it opens weaker this morning, I’m hopping in.

Watch how to crank up profits with Ford …

Spike or Swell: Part 2

Hey Traders,


The last time the VIX actually experienced a swell was way back in August.


Notice below how the VIX started to rally in the middle of August — ALONG WITH the S&P 500:



Over the next few weeks, once the VIX popped, the S&P 500 sold off beyond its initial drop.


It bottomed out at the end of September.


What We See Now


Now let’s look at what happened in the last couple of weeks:



While the VIX rose modestly, it was in conjunction with a falling S&P 500 …


Then we had our VIX shock, which sort of came out of nowhere — VIX had actually been down over the previous two sessions.


So when I saw S&P’s 90-point rally on Monday, I asked myself if I believed it.


The answer was …


Yes, I do.


I think what we saw last week was a spike.


And once the VIX falls back quickly after a spike, it tends to lead to an uptrending market for several weeks.


So I expect the Option Pit VIX Light to go Red on Tuesday, with the VIX heading down.


I also expect some follow through on Monday’s market.


I would be using this opportunity to fade VIX (alongside all the size traders who have been long on-the-money puts for a few weeks.)


Money Move to Make


I would be a buyer of VXX 15 puts for 1.25. There is a huge sloping contango now (futures price is higher than the spot price) and the VIX appears to be heading to sub-20.


The VIX Option Pit VIX Light Is Yellow, and we expect big moves in VIX.


Your Only Option,

Mark Sebastian

The Secret to Successful Trading

Hey Traders,


My older son has his first baseball tournament of the season today.


And he’s going to do well …


How do I know?


Because he understands the secret to successful trading.


At some point this weekend, he’s probably going to strike out (hopefully swinging, if it comes to that) …


BUT he’s not going to take that strikeout with him back to the field once he leaves the dugout.


By the time he’s fielding a ground ball, he will have completely forgotten about his last at-bat.


You see, he has it in him to forget his failures and move on …


And he also learns from setbacks …


If he faces the same pitcher the next time up, he probably will get a hit.


There’s another kid on his team, who’s maybe even more talented, but he won’t get the same result after a strikeout (if history is any indication).


He’ll get into his own head, maybe make an error in the field …


… and potentially start crying.


He’ll be done for the game.


No Crying in Trading


You see, it’s not just skill and talent.


It’s having the mental capacity to move on that allows one kid to have a great game and another to have a seat on the bench.


This is also the secret to successful trading.


When I was in Group One’s training program learning to become a market maker, I made a “healthy” number of mistakes.


But I rarely made the same mistake twice — and I never let the trainers’ grilling get to me.


Mental fortitude allowed me to get through the training program, along with just five others out of a class of 20, while nearly all of the kids that went to Ivy League colleges got chopped.


I’m not kidding …


There were 16 Ivy Leaguers and four non-Ivy Leaguers in my training class …


Total graduates: 3 Ivies, 3 Non-Ivies


Those of us who went to Villanova (me) or Fordham had it in us to move past our mistakes.


Many of the Ivy Leaguers had never actually experienced failure.


In a high-stakes training program, when you screw up … you hear it.


Luckily, I was pretty used to hearing it (thanks Mom and Dad! )…


Failing and being unable to get past it ultimately led to 14 brilliant 22-year-olds getting the boot.


What It Means for You


You need to know that in trading …


YOU ARE GOING TO EXPERIENCE FAILURE.


I lose on trades often.


I have losing days.


I have losing weeks and losing months.


Does it bother me?


Heck yeah!


But does it affect me?


Only in positive ways.


Take our Robinhood Trader program, for instance. I went through a good three weeks of drawdown a couple of months back.


I grew my account from $5,000 to $8,700 dollars in about five weeks.


Pretty good!


I then traded my way out of $2,000 dollars over the next three weeks.


Yeesh.


Yet every day I sat down with the same game plan:


Use the Robinhood radar, find the best trade — and trade it.


As I was in drawdown, I huddled with my team of pro traders and asked, “Am I doing something wrong?”


The answer was NO — when it came to the trades.


But the answer was YES when it came to risk management. I needed to tweak how much I was willing to lose on a trade …


And I did.


That is why, since the beginning of January, I have had just one losing week —  and it was only marginal.


Losses, while annoying, do not affect my killer instinct or my belief in what I’m doing.


When the trading day is over, I move on and go back at it the next day.


That’s why I’m able to put together huge win streaks — because I’m able to forget about losses.


But for many retail traders, a couple of losses gets them scared.


And just like the kid on my son’s baseball team, when you get scared, you make more errors …


You ride losers and cut winners short.


Coming OUT of losing, I had some of the biggest percentage winners of my career.


I never lost my ability to ride winners, and by tweaking to cut losers, my account has gone up and up.


So if you want to be a winner … know you will have losers and learn from them — but don’t let them change you.


On Your Side


The vast majority of retailer traders could benefit from professional assistance …


And that’s not a knock!


It’s simply that the education and insights offered by a team of pros is a great way to help everyday traders make more money.


Our Option Pit Pro students certainly agree. 


We teach concepts, we teach trading, we technical analysis …


And most importantly, we coach you on the mental side.


I always have my team around me … and an entire Elite Pro Chat Room that I can consult with when I’m in a funk.


And they won’t see me crying on the bench …


Because I’m always in the game.


Who’s your team?


Your Only Option


Mark Sebastian

Mark Sebastian

Amped for Energy

Hey Traders


The energy ETF XLE has been strong for over a month now, but especially so for the past 10 days.


The recent ramp-up has been helped by a big rotation out of tech that saw the QQQ drop 8% (at the low on Tuesday).


XLK, the tech ETF, closed down over 4% since Feb. 12, while XLE is up almost 9% in that time.


I have fundamental reasons to think the energy surge will continue:


  • The Biden administration is gearing up for regulatory action that is going to cause oil rise

  • More importantly, demand is clearly picking up. People are traveling more as the US gets vaccinated. For instance, I’m going to see my parents for the first time in six months sometime in April (now that they both have MRNA vaccine).


Even with XLE up 9% in 10 days and $19 since the beginning of November (over 65%), the option order flow is saying …


THIS IS GOING TO KEEP GOING.


Two massive bullish trades in XLE point toward a lot of upside …



So let’s break these down.


Trade No. 1

On its surface the first trade looks like a call spread sale …


That would normally be bearish (meaning the trader wants the stock to drop).


But in this case it was actually a roll …


The customer was already long 46 calls for a healthy profit. He or she sold their long 46 calls and rolled them to the 50 calls.


In doing this, the trader collected 1.86 AND maintained upside exposure to XLE.


This is classic risk management on a winner that has the potential for continued bullish movement.


I did the EXACT same thing in MRO yesterday …


I was long the MRO March 9 call for .88, and I sold my position at 1.55, 1.85 and 2.11.


Translation: Increases of 40%,  40%, and 20%. … All told, a 101% gain.


I took a TINY bit of this profit and bought the March 5th 11 calls for .60.


The trader above was more aggressive than I was, because they used a healthy portion of their profits to buy the 50 calls.


This trader would NOT have done this trade if they didn’t think the stock was going to keep going.


Trade No. 2

The second trade is more cut and dry.


A trader bought the September 52-59 call spread on a small ratio, paying a little over 1.70 net.


The trader who put this on wouldn’t have done so unless they think the stock is going to make a run at $55 a share — because that’s where the spread really starts to see its profit ramp up.


You simply do not do this trade unless you have a strong bull case for the next six months or so.


This trader is looking for another 17% in XLE between now and September expiration.


The Takeaway


The two trades above, along with my fundamental case, have me LOVING energy.


I like conglomerates like XOM and CVX, and I like names like MRO and HES as well.


They will all do better with increasing demand for gas.


One name in particular that keeps showing up on my proprietary trading scanner is ET.


I will likely be buying calls this week …


Your Only Option,


Mark Sebastian

My Portfolio Revealed!

Hey There Traders,

 

Changes in the market narrative come at you fast.

 

Last week, it was all about Treasury bond yields surging and gold trading down …

 

Now, higher inflation and money flowing into inflation hedges are the thing.

 

It’s market whiplash at its best …

 

I stuck it out last week. It wasn’t easy, but I focused on money flow …

 

I mean, you have to trust it.

 

Stimulus is relentless and will be for the foreseeable future …

 

The Power Income Reflation Indicator tracks three key areas of stimulus (M1 Money Supply, Quantitative Easing and Government Spending) …

 

And all cylinders continue to fire: 

 

 

Supercycle


All this reflation is driving a commodity supercycle:

 

    • Monetary policy (QE) has grown bank reserves that end up being used to purchase stocks and bonds
    • This has created a foundation built on inflation not seen since the 1960s.
    • Investors are just realizing this fact and are light on inflation hedges …
    • The chart below shows commodities prices are historically low compared to the broader market, which is helping to drive a stock selloff.

 

    • This will fuel a rally in commodities to hedge against inflation …

 

The perfect storm of increasing demand and limiting supply is upon us.

 

There is a combination of global stimulus, capital scarcity in many commodity sectors, and 50 years of underperformance compared to financial assets that make commodities a great asset class to invest in…

 

This doesn’t mean inflation will be here to stay tomorrow … necessarily.

 

But it does mean any short-term rise in inflation could turn into something significant and long lasting …

 

Remember, the nature of inflation is that it arrives abruptly and with little warning …

 

And in this case, we actually do have signs that it’s approaching.

 

The Power Income Portfolio (PiP):

 

So I’m going to give you a rare glimpse of my full Power Income Portfolio (PiP).

 

Take the opportunity to check it out and get a better sense of how we’re building income for life as the pieces fall into place for inflation.

 

It’s a mix of call spreads, outright longs and covered calls …

 

And you’ll see silver and gold miners, energy mid-streamers and an electric utility I bought just yesterday …

 

A New Addition

 

As of Monday, the Power Income Portfolio has a new addition that’s included in the chart above …

 

Consolidated Edison (Ticker: ED): ConEd operates multiple subsidiaries in the Eastern US. The crown jewel is the Consolidated Edison company of New York, which is a regulated utility providing electricity and gas service in New York City and Westchester …

 

ConEd carries an A-rated credit from S&P, and as of 2020 still has liquidity over $1B in terms of cash/equivalents, and a $2.25B credit facility.

 

They come with a 14% discount according to the Power Income Valuation Model (PiVM). Take a look …

 

ConEd also comes with 46 YEARS of Dividend Growth…

 

That is an incredible number. Check it out …

 

 

ConEd is such a stable, regulated entity you can take advantage of a covered call strategy, meaning selling a call option just above the market to capture down side protection and upside gain, as well… 

 

I purchased 100 shares of ED at $67.40 and sold a 68-call expiring in 2-weeks at $.84…

 

If the stock is called, it’s a two-week return of $144 on $2,000 of capital … 7.2% or 187% annualized.

 

Bring it Home

 

A Power Income Portfolio will provide generational wealth — while also giving you some bullets for speculating on high fliers.

 

For once, you can have it both ways.

 

Live and Trade With Passion My Friends ….

 

Griff

Institutional FOMO Has Entered the Bitcoin Chat



Hey There Income Hunters,


Signs are pointing to a massive wave of new buyers of Bitcoin entering the market …


And the harbinger is most unlikely.


MicroStrategy (Ticker: MSTR) headed by entrepreneur Michael Saylor is blazing a trail for cashflow-rich companies to shift from repurchasing shares to buying Bitcoin.


Companies repurchase shares as a way to return cash to shareholders… they also make the company look more financially attractive by increasing earnings per share, since they reduce shares…


MSTR’s core business is business intelligence and they are a well-established entity.


However, their best days of growth are far behind them …


Their story has become, however, because Saylor realized the seemingly never-ending stimulus, coupled with zero interest rate policy, offered the textbook setting for a weaker dollar …


This epiphany convinced him to shift away from using cash on the balance sheet for share buybacks and to instead seek an alternative use in the form of an inflation hedge …


Enter Bitcoin — which provides an ideal digital currency alternative to dollars, plus a soaring market value that can boost MSTR’s valuations …


Check out this move out …


Saylor recently sold $650 million convertible notes at a .75% coupon and 37.5% premium (extremely low levels of issuance) … to buy 32,220 Bitcoin at an average price of $21,726.


Then Elon Musk entered the fray and invested $1.5 billion of TESLA’s cash in Bitcoin.


With that, the stage is set for institutional Bitcoin FOMO!


The Bitcoin rally has just started.


No MSTR-y


In total, MSTR holds over 70,700 Bitcoins on its balance sheet at an average purchase price of $16,100 …


Nice boost in valuations with Bitcoin nearly tripling in price from there …


And MSTR may be just getting started …


Saylor announced on Feb. 16 that the company was raising another $600 million in capital to purchase more Bitcoin, which is now trading above $50,000 …


Could this borrow-to-buy approach create institutional buying of Bitcoin at ever higher prices?


Could $500,000 or higher be achievable? 


Yes. Yes, it can.


CEO’s recognize the beauty of Bitcoin in its scarcity value — the total number of coins is limited to 21 million.


The market is searching for true value, which could still be much higher from here…


Companies that believe in the potential of a dollar meltdown will be interested in following MSTR and TESLA’s lead on this move into Bitcoin…  


I mean, MSTR had limited growth potential with a flatlined stock price for the past couple of years… 


And now …


 


Do you know what that chart shows?


MSTR has transformed itself into a leveraged bet on Bitcoin …


Based on their current position, Bitcoin adds $3.5 billion of value to the balance sheet … 


MSTR’s market cap has risen to $9.5 billion…


A bet on MSTR today, would mean you expect Bitcoin to rally over 150K, as that would justify the $9.5 billion valuation …


And that at price could be in the rear view mirror in no time.


The Fallout


The stock market could suffer from collateral damage if a large number of companies follow MSTR and TESLA down the same path …


One issue could be a further decline in buybacks …


Plus, removing that much liquidity from the economy could concern the Fed and Treasury.


A negative outcome could come in the form of taxes.


Taxing unrealized capital gains would be one possibility that has been under the radar…


A proposal championed by incoming Senate Finance Committee chair Ron Wyden (D-OR) could become a reality down the road.


Under Wyden’s proposal, taxpayers over a certain income level or with qualifying assets exceeding a threshold, would have to pay taxes on increases in the on-paper value of assets, even if the capital gain was unrealized …


I’ll be keeping an eye on that here in Power Income.


Bring It Home


Speculation Fever is rampant …


It is simply a reaction to extremely low interest rates along with stimulus checks …


Now, throw in fear of dollar devaluation that destroys all holders of dollars and Government bonds — and you get FOMO on a chance to convert into inflation hedged assets that are soaring in value, particularly Bitcoin …


Have a great week and as always …


Live and Trade with Passion My Friends,


Griff

I Survived A Texas-Sized Winter Meltdown

Hey Traders,


Up until last October, I lived in Chicago for 40 of my 42 years on this planet. (I spent the other two in New York). 


But in the fall of 2020, my family and I made the big move to Austin, Texas, a switch that we have thoroughly enjoyed.


Case-in-point … on Feb. 9, I was relaxing outside in sunny, 64-degree weather …


I was in a Lonestar state of mind!


Then came the Big Freeze of ‘21.


As a tough-as-nails native Chicagoan, I’m not afraid of cold weather — it’s in my blood.


But, the rest of Austin?


Well, not so much.


I’ve lived in cold-weather climates my whole life and have never had my pipes freeze. In fact, I can’t recall ever losing power due to a winter storm.


I have also dealt with temperatures below zero for a week straight and have never had a problem, other than being cold when I walked to work. (Uphill, both ways and in the snow, for all my children know.)


When we decided to make the jump to Austin, we did so for a number of reasons, not least of which was the year-round nice weather.


Welp, as you may have heard, it was below freezing here for about a week recently.


Shocking, yes. But not a big deal for me … my body converts cold weather into Vitamin B12, I think.


But the rest of Texas …


Let me tell you, this type of weather doesn’t happen too often deep in the heart.


Temps dropped below freezing on Friday, Feb. 12, and didn’t climb back past that until Wednesday afternoon. Even then, the weather didn't really ‘break’ until this past Friday.


So a full week of abnormally low temperatures, thanks to a lot of polar vortex


In Chicago, that's pretty normal … in March.


In Texas … things break.


For a state built on energy, the grid is not designed for this much extended cold weather.


Refineries stopped working …


Wind turbines froze …


A LOT of people lost power, including my kids’ nanny and a family of close friends.


“Come on in, y’all,” we said, clearly proving that we’re now real Texans. “We have plenty of room!”


We do — but with 11 people and three dogs staying in the house, the conditions started to feel a little cramped.


THEN …


The pipes froze.


We lost water in half of my house … and hot water throughout the entire house.


We didn’t get hot water until Wednesday when temps rose to a balmy 34 degrees.


EVERYONE took a shower (individually) and got unsmelly … 


Then Wednesday night, the water stopped completely.


As of this writing on Friday evening, we have no water in the house …


We are using melted snow to flush the toilets …


I have not had a shower since Wednesday … and I’m using baby wipes to keep the ‘funk’ to a tolerable level.


Dark times at the Sebastian Ranch, friends. Dark times, indeed.


Now, there is some good news …


Our nanny and family friends finally got power earlier on Friday. They’re all gone with their kids and extra dogs …


And we never lost power, so we were very fortunate in that respect.


This Story Has A (Trading) Moral!


So what does this have to do with trading, you may be wondering?


Where is the big lesson, Mark?


Here it is …


Be prepared. What you don't think can happen … will.


Over the last year, we went from an all-time market high, to an 87 VIX and the biggest sell-off since 2008 …


And back to an even higher all-time high!


Twelve months ago, I would have predicted NONE of those things happening. (Let alone the Coronavirus and moving to Texas.)


But I had a GREAT year trading in 2020 and am doing well in 2021 (shower scarcity aside) …


Because I prepare and do my homework.


I am never in a position where I can’t trade — because I plan for the worst.


The way I (and my team at Option Pit) trade is that we try to make money every day,  BUT …


If the market craps out, our accounts will not.


Texas was unprepared for a week of really bad weather …


Is your portfolio prepared for a week of terrible market losses?


If not, you should reach out to us so we can show you how to be ready for the crazy times that will invariably return in some form …


Because you do not want your portfolio to end up like the central Texas power grid and water system — down and out.


Your Only Option,


Mark Sebastian

PS – I had planned to start a Sunday video series this week but, well, if you read this far, you know. So, next Sunday be on the lookout for the first in an ongoing series of options explainer videos!