How to Make Dough In A Market Going Nowhere Fast

Yo Pit Crazies,

 

This trade-the-Fed thing is going to be with us forever, it seems. This week is just a sign of things to come.

 

I strongly recommend you get Macro Griff on your side.

 

Now, up for a game of Guess the Chart?

 

Vol Man sees something weird, and he tried to trade it yesterday.

 

 

Let’s check it out.

 

The Answer Is …

 

That is a chart of ProShares Ultra S&P Short Term VIX Futures ETN (Ticker: UVXY) options of the last two weeks.

 

UVXY has had a range of 12 to 23 on the recent bout of doubt that is hitting big tech as the Fed holds the line (in their posture anyway) to raise rates.

 

Note: The Fed started to Taper in Nov and that pretty much was the high for Tech. Some cause and effect there.

 

What was strange about the chart was the range in the product intraday was big but the close did not have much variation.  The same can be said for the broader market, including the S&P 500.

 

In a Turbo Trade this week I tried to buy a UVXY Feb. 11 13.5/16 put spread for $1.14. I did not fill it and it closed $1.35. 

 

I think simple put spreads in UVXY with a midterm duration of two to three weeks will work well.

 

The intraday vol will start to fade… eventually.

 

The Rundown

 

Capitol Gains w/ Frank Gregory
Option Pit DC and Wall Street insider Frank Gregory and I run a portfolio approach to trading options with stocks that have good long-term prospects based on Frank’s K Street knowledge and my options expertise.

      • I added some cheap QuantumScape Inc. (QS) May calls to the portfolio.
      • My Ford Motor Co. (Ticker: F) will need some help for a gain today.

 

Power Income Trader:

Power Income Trader is a systematic approach to trading inflation.  By pulling real-time data from the Fed, US Treasury and Gov’t, Power Income Trader alerts users on changes in money flow driven by Fed policy. Bill’s system puts you out in front of the most powerful money flow in the world.

 

Griff bought SPDR Standard and Poor’s 500 ETF Trust (Ticker: SPY)  March. 4 425/421 put spreads for .97 or better. This is a paired hedge against Teledoc Health Inc (Ticker: TDOC) and Penn National Gaming Inc (Ticker:  PENN)  and he says, “IIn Stage 4 Deflation you want quality value plays against the broad index.”

 

Get on board with Griff in Power Income Trader.

 

Option Shopper

Licia Leslie puts on her best trading shoes to find option bargains using market making and charting experience. Generally debit options and spreads with low risk, high reward setups. Short hold times are the norm.

 

Licia shopped for Pfizer Inc (Ticker: PFE) calls and came up 78% green.

 

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

 

      • I closed a very short term butterfly in SPDR S&P 500 ETF Trust (Ticker: SPY) this week for a 6% gain, but I stuck to the plan and closed Thursday.  This morning the SPY fly trade would be a homerun.
      • My Ark Funds Tech/Innovation Fund ETF (Ticker: ARKK) will close  with a 14% gain.

 

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 story in Pro is looking for good puts to sell, with long duration and well out-of-the-money when the volatility is so high.

 

Big Money Flow

Each week, Option Pit CEO Mark Sebastian looks at size institutional option buying with a twist.  He mostly buys calls or puts to ride the large momentum trades.

 

      • Mark closed out his Occidental Petroleum Corp (Ticker: OXY) for 100% gains.  

 

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

 

      • My Ark Funds Ark Technology and Innovation Fund (Ticker: ARKK) put flies and call will likely go out for a 10% gain. I own the call for a 10% credit after closing all the put flies this week.

 

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 Cboe Volatility Index VIX, iPath Series B S&P 500 VIX Short Term Futures ETN (VXX) and ProShares Ultra S&P Short Term VIX Futures ETN (UVXY) options.

The Option Pit VIX Light Is green for VIX today but I expect to change to yellow by the end of the week.

 

I am running two of three trades where I cannot lose and own VIX puts to Feb. 16 expiration.

 

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

Oil Is Going to $100

Yo Pit Crazies,

 

Why do I think oil is going to $100?

 

Well, it always does.

 

The Covid-related production shutdown with the policy-fueled supply drop was unprecedented. 

 

Now the move to a Covid endemic like the flu will happen relatively quickly. The recent lifting of restrictions in England is a prime example.

 

The move down in oil should see a similar bounce back up.

 

Let’s take a look at how to play it …

 

Oil Stocks Are the New Tech

 

Wall Street is a fashion business and it can’t wait to get on the new hot thing. Right now, the “it” thing is oil.

 

In Capitol Gains I am looking at PetroBras SA (Ticker: PBR) because the order flow for the last two weeks has been crazy.

 

.20 for the PBR Mar04 16 calls!

 

Lots of call buyers in what is arguably the cheapest oil property out there.

 

PBR suffers from government interference, but there is a real chance that Brazil divests itself of this property and then who knows what it is worth.

 

This is a Cap Gains long and I want some duration in this. In Wednesday night’s session we figured out how to finance the calls. PBR paid $1.30 in dividends last year.

 

The Rundown

 

Capitol Gains w/ Frank Gregory
Option Pit DC and Wall Street insider Frank Gregory and I run a portfolio approach to trading options with stocks that have good long-term prospects based on Frank’s K Street knowledge and my options expertise.

      • I am still riding my Ford Motor Corp (Ticker: F) calls into earnings. I expect to close the put butterfly Friday.

 

Power Income Trader:

Power Income Trader is a systematic approach to trading inflation.  By pulling real-time data from the Fed, US Treasury and Gov’t, Power Income Trader alerts users on changes in money flow driven by Fed policy. Bill’s system puts you out in front of the most powerful money flow in the world.

 

J-Pow spoke yesterday.

 

Then Griff laid down the law in a live session that included two picks that are still actionable.

 

You can only get them when you subscribe to Power Income Trader. (And I suggest you do.) 

 

Option Shopper

Licia Leslie puts on her best trading shoes to find option bargains using market making and charting experience. Generally debit options and spreads with low risk, high reward setups. Short hold times are the norm.

 

Licia is shopping for Pfizer Inc (Ticker: PFE) calls that are green and holding well in this back-and-forth market.

 

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. 

 

Giovanni was using Edge Hunter VBS to scalp some gamma in JPMorgan Chase Corp. (Ticker: JPM) on Wednesday.

 

 

Big Money Flow

Each week, Option Pit CEO Mark Sebastian looks at size institutional option buying with a twist.  He mostly buys calls or puts to ride the large momentum trades.

 

      • Mark closed out his Occidental Petroleum Corp (Ticker: OXY) for 100% gains.  

 

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

 

      • My Ark Funds Ark Technology and Innovation Fund (Ticker: ARKK) put flies and call will likely go out for a 10% gain. I own the call for a 10% credit after closing all the put flies this week.

 

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 Cboe Volatility Index VIX, iPath Series B S&P 500 VIX Short Term Futures ETN (VXX) and ProShares Ultra S&P Short Term VIX Futures ETN (UVXY) options.

The Option Pit VIX Light Is green for VIX today but I expect to change to yellow by the end of the week.

 

I am running 2 of 3 trades where I cannot lose and own VIX puts to Feb. 16 expiration.

 

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

Is VIX Topped Out?

Yo Pit Crazies,

 

Did you miss another 100 point swing in SPX on Tuesday?

 

It happened in a flash

 

You need to sign up for Bill Griffo’s live post-Fed session today or you will miss all the action coming from J-Pow and co.

 

Bill will set it up so you can knock it down.

 

Meanwhile, I am making a call …

 

VIX made a top yesterday.

 

And here’s why …

 

Vol of Vol Took a Breather

 

If you want the best tell in the market, look no further than the vol of vol, the VIX of the VIX: VVIX. (This is just the Cboe running their VIX index metric on the VIX options instead of the S&P 500.)

 

 

A reading of 100 for VVIX is pretty benign. Below 100 is sleepytown.  150 is on the high side, and I saw a 175 intra day on Monday. The bid for VIX options declined yesterday with no news settled. 

 

That is the first chink in the vol armor.  How the market reacts to the Fed will tell all and that is why I think we have a binary event for the week.  We’ll see either see 40 VIX or 20 VIX.

 

I set up the trade in the Volatility Trading Club yesterday with upside call flies and VIX puts …

 

The key to trading VIX is to give it a week or so. Most of the moves in VIX take a week to develop and when the move in vol comes, which it eventually does, cash the options in.

 

Now what is Griff going to say …

 

The Rundown

 

Capitol Gains w/ Frank Gregory
Option Pit DC and Wall Street insider Frank Gregory and I run a portfolio approach to trading options with stocks that have good long-term prospects based on Frank’s K Street knowledge and my options expertise.

      • I added some Ford Motor Co. (Ticker: F) put flies this week as a call hedge and I’m looking at Canejo Corp (Ticker: CCJ) for this week.
      • I love the oil trade, too, so Petrobras SA (Ticker: PBR) might get the call today.

 

Power Income Trader:

Power Income Trader is a systematic approach to trading inflation.  By pulling real-time data from the Fed, US Treasury and Gov’t, Power Income Trader alerts users on changes in money flow driven by Fed policy. Bill’s system puts you out in front of the most powerful money flow in the world.

 

 

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. 

 

Cat picked up some scratch in Griff spreads and some VXX call flies:

 

Ken A looking for bargains in the steel stocks today:

 

Ken A  1:01 PM

STO additional Feb CLF 15 puts for $0.81…STLD had a great ER and price is up…X reports this Thursday.

 

Big Money Flow

Each week, Option Pit CEO Mark Sebastian looks at size institutional option buying with a twist.  He mostly buys calls or puts to ride the large momentum trades.

 

Mark had a banner day closing two positions: Pacific Biosciences Inc (Ticker: PACB) puts are up 79% total gain and  Vodafone Group PLC (Ticker: VOD) Apr14 16 calls closed for a 83% gain.

 

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 Cboe Volatility Index VIX, iPath Series B S&P 500 VIX Short Term Futures ETN (VXX) and ProShares Ultra S&P Short Term VIX Futures ETN (UVXY) options.

The Option Pit VIX Light Is Green, and VIX is still moving higher, although at a slower rate.  I expect VIX to trade a 40 or 20 this week.

 

I have VTC Trade No. 278 with an 8-point wide call butterfly in VXX and cheap Feb. VIX puts for a hedge, and I closed the last of the call flies for a 60% gain. Now I own the puts for free for the next three weeks.

 

Mark rocked out some VIX Feb. 16 25/40 call spread closed for a 126% gain and has some puts for the ride back down.

 

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

 

What Makes a Vol Event?

Yo Pit Crazies,

 

What makes a volatility event?

 

Well, take this Wednesday, for instance. The Fed will either backpedal or go full speed into quashing inflation.

 

Griff will be there to attack, either way. Join him starting at 3 p.m.

 

We just had a vol event on Monday brought on by three big issues:

 

  • Multiple crumble in the Invesco QQQ Trust (Ticker: QQQ)

  • Geopolitical Tensions/COVID Supply Chain Madness

  • Inflation Hawks Soaring Above Their Prey

 

Mark, Griff and I had an all hands event and I’ll reveal what we looked at and what to do going forward.

 

Here we go …

 

MASSIVE Intraday Vol on Monday

 

The SPX closed up .28% for a daily realized volatility of 4%.

 

However, SPX was down 4% today (176 points) at one time for 64% intraday volatility and an range down and up of 352 SPX points in total.

 

Now that is a move – 8% range for the day! The VIX closed 29.90, or only up 1 point on the day.

 

SPX daily chart with 1 min candles

 

With VIX closing at a 29.90 that is still an expected just under 2% per day on average for 30 days.

 

During the All Hands of Deck we looked at a few trade ideas that were cheaper ways to take advantage of VIX moving higher.  

 

At the time of the show, SPX was in full swoon and diving as we were talking.

 

What I settled on was this:

 

      • Bought 5 VIX Feb16 35/50/65 call butterflies for 1.47 
      • Bought 20 VIX Feb16 19 puts for .35

 

What I am trading is the range so I expect VIX to be 20 or 40 by next week. Just as if you are trading SPX you are expecting near 100 points per day on average in movement. 

 

I expect my trade to pay at either end of the range.

 

Remember, even with the huge comeback, nothing was settled as far as the big vol events, although the CDC did finally admit that previously infected people have robust immunity to COVID.

 

That should start the path to normalcy.  I cannot see any news item other than that to spur the rally.

 

The Fed is Wednesday and that will be the big jump in the range for SPX.

 

Don’t miss Griff.

 

To Your Trading Success.

 

AG

Mark It Down: VIX Will Jump Over 30

Yo Pit Crazies,


The market is off to a dismal start in 2022 – but that doesn’t mean you shouldn’t be profiting.


In fact, that’s one big reason why Option Pit is here … to provide the support, education and community when the going gets tough for the outside trading world – so you can continue to stack gains.


Always remember … you’re not alone!


Our team of pros have decades of experience and our growing community of retail traders are a valuable resource for idea flow, as well.


With all that in mind, look for two events this week.; 


  • All Hands On Deck Monday, Jan. 24, Noon EST: It’s getting ugly out there. The VIX is more than 60% in the past month – and Wednesday’s Fed event is a mystery wrapped in a box covered in question marks. Guess what all this uncertainty means for you? That’s right, opportunity. Here’s your direct access into the room.


  • Bill Griffo LIVE Fed Event Wednesday, Jan. 26, 3 p.m. EST: Griff seems to profit no matter what moves the Fed makes. And after 40 years of trading it’s like he knows what the central bank is going to do. Well … he does! Join Griff as he translates J-Pow’s proclamations, reveals the sector ready to explode in 2022 and shares his top trades to make right now. No cost for OP Pro and Power Income Trader members. All others can register here.


Think of the current situation as Big Money Vol meets the VIX.


VIX is in the “danger zone,” which at Option Pit is Zone 4, 24 or higher. 


There is a how, what and why to Zone 4


And, of course, a trade.


The Big Why is a dose of uncertainty from last Wednesday.


Let’s get on it.


The President’s Remarks Did Not Calm Markets


After 30 years of trading options, I can say nothing moves vol faster than a surprise government action.


We just went through four years of Trump and China tariff volatility. Remember that?


The new vol is coming from a surprise nod to an “incursion” and a more aggressive Fed policy outlined during President Biden’s press conference last week.


Those were surprises – and the stock market did not like them when it was a more “Uncle Joe” approach to things.


Looking under the hood of stocks, many higher fliers in 2021 are already down 50 to 70% from highs.


I mentioned this throughout the week with Ark Funds.


The Trading Legion is running a nice win in Ark Funds Innovation and Tech (Ticker: ARKK) put flies and a call.


The selloff is now hitting the big caps like Nvidia Inc. (Ticker: NVDA) and Apple Inc. (Ticker: AAPL). 


One-day VIX chart with IV on the bottom.


Vol Man is noticing the bid for VIX options, but it is not a straight-up spike. I think the when and how comes this week while waiting for the Fed to speak and in its aftermath.


I want to ride that wave.


In the VTC I posted some VXX call butterflies as an upside vehicle to ride.  Even short-term flies for this week could work out well.


Get ready for a bumpy week!


The Rundown


Capitol Gains w/ Frank Gregory
Option Pit DC and Wall Street insider Frank Gregory and I run a portfolio approach to trading options with stocks that have good long-term prospects based on Frank’s K Street knowledge and my options expertise.

  • I added some Ford Motor Co (Ticker: F) put flies this week as a call hedge.


Power Income Trader:

Power Income Trader is a systematic approach to trading inflation.  By pulling real-time data from the Fed, US Treasury and Gov’t, Power Income Trader alerts users on changes in money flow driven by Fed policy. Bill’s system puts you out in front of the most powerful money flow in the world.



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 is looking at the Bitcoin freefall as it has plenty of room to go and Mark posted a killer 7x Day Trade:

Big Money Flow

Each week, Option Pit CEO Mark Sebastian looks at size institutional option buying with a twist.  He mostly buys calls or puts to ride the large momentum trades.

 

Mark kept the hot trade going in Pacific Biosciences Inc (Ticker: PACB) puts that are up 100%.


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 Cboe Volatility Index VIX, iPath Series B S&P 500 VIX Short Term Futures ETN (VXX) and ProShares Ultra S&P Short Term VIX Futures ETN (UVXY) options.

The Option Pit VIX Light Is About to Go Yellow. The VIX curve is in a slight backwardation, however, the front expiring this week might get a pop.


I have VTC Trade No. 278 with an 8-point wide call butterfly in VXX and cheap Feb. VIX puts for a hedge. I have No. 277 for a 10% win and the VXX puts for a credit. No. 277 was initially a short vol trade but it made money anyway.


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

Ignore the VIX DANGER ZONE at your peril!

Yo Pit Crazies,

 

In the wake of TradeFest, we are welcoming a bunch of new OP Pros into the chat room this week.

 

Why don’t you join them and get a lifetime of Option Pit learning and trading?

 

You’ll find some Pro Chat goodness inside today …

 

The VIX made some touchy signals yesterday, and 2022 is shaping up to be a humdinger (technical term) of a year.

 

And this is important …

 

I don’t think the S&P 500 selloff is over – I think it is just getting started. 

 

Oh my!

 

Intraday Volatility in SPX Was Well Over 32% Thursday

 

Well, AG, what does that mean to me, you ask?

 

Generally stocks move more intraday – the daily range or Average True Range (ATR) – than they do on a close-to-close basis.

 

Traders keep both the close-to-close and the daily ranges in mind when pricing options.

 

On a day like yesterday – when stocks open up 1%, give it all back and then some to close down 1%–  the close-to-close move belies the big move inside. 

 

And that means it’s Danger Zone time!

 

Vol Man surfs the drop in SPX. Note the big intraday move.

 

I expect both bigger moves heading into the Fed next week and a 30 VIX print very soon.  

 

Lots of folks are invoking 2018, which is the last time the Fed aggressively jumped up rates and multiples in tech stocks got crushed.

 

That is looking more likely now,

 

As I said, I expect a higher VIX – and should have a nice Volatility Trading Club trade to go with it next week.

 

The Rundown

 

Capitol Gains w/ Frank Gregory
Option Pit DC and Wall Street insider Frank Gregory and I run a portfolio approach to trading options with stocks that have good long-term prospects based on Frank’s K Street knowledge and my options expertise.

 

      • I opened more Ford Motor Corp (Ticker: F) put flies yesterday now that the market turned ugly. 
      • One more day for SPDR S&P Oil and Gas Productions and Explorers ETF (XOP) to pop, but I did leave a nice win on the table pressing for more.

 

Power Income Trader:

Power Income Trader is a systematic approach to trading inflation.  By pulling real-time data from the Fed, US Treasury and Gov’t, Power Income Trader alerts users on changes in money flow driven by Fed policy. Bill’s system puts you out in front of the most powerful money flow in the world.

 

Look for Bill’s Fed take next week (he’s going live in a special session after FOMC). And his short tech trade is looking VERY correct.

 

Big Money Flow

Each week, Option Pit CEO Mark Sebastian looks at size institutional option buying with a twist.  He mostly buys calls or puts to ride the large momentum trades.

 

Mark had two partial closes of 100% and 50% on Thursday.

 

Plus he took a 33% gain in Intel Corp (Ticker: INTC) as BMF keeps bringing home the goodies.

 

And Mark has a hot trade going in Pacific Biosciences Inc (Ticker: PACB) puts that are up near 100%.

Option Shopper

Licia Leslie puts on her best trading shoes to find option bargains using market making and charting experience. Generally debit options and spreads with low risk, high reward setups. Short hold times are the norm.

 

The Shopper is looking Chevron Corp (Ticker: CVX) puts as the oils pull back.

 

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 was set for yesterday’s move.

 

I closed some of my upside iPath Series B S&P 500 VIX Short Term Futures ETN (VXX) call spreads for a 25% gain.

 

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 Cboe Volatility Index VIX, iPath Series B S&P 500 VIX Short Term Futures ETN (VXX) and ProShares Ultra S&P Short Term VIX Futures ETN (UVXY) options.

The Option Pit VIX Light Is Yellow. The VIX curve is at a big inflection point on whether the market falls apart or not.

 

Mark did add a VIX backspread this week and the calls are perking up.  Today might provide a close on the call spreads.

 

I have VTC Trade No. 277 upside still as it kicks into high gear. 

 

Today we see if VIX punches out of orbit.

 

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

To your trading success

 

AG

Do You Fade A Rising VIX?

Yo Pit Crazies,


As I write this, President Biden is giving a mini-State of the Union address to bolster the case for his agenda.


What he snuck in is that the Fed will have to get tough. Specifically, that the Fed Chairman Jerome Powell will have to tighten things up.


Oh boy.


To be honest, I am all for the Fed tightening, so I applaud this move.


But stocks won’t like it.


The VIX hovered all day on Wednesday but would not sell off.


That is the tell.


VIX Rallying on Underwhelming Moves Is Usually a Danger Sign for Stocks


For most  of Wednesday, stocks did not move very much and spent much of the day bouncing around.


The bond auction went better than expected so you would think stocks would stage a rally, which they did. 


But it failed.


Right now VIX is pricing close to 1.5% moves per day everyday for the next month. That is what I call Zone 4 (VIX 24 or greater), or very close to it.


One-day VIX chart

One symptom of 2021 is that late-in-the-day VIX rallies did not carry over for the next day.  Today will be a test if there are new lows coming prior to the Fed meeting next week.  


At this point we need the market to sell off in order to get VIX to go to the next level. That could happen today.


I like the idea of buying short term VXX strangles for a three- day hold.  Let’s gooo!


To learn more about this trade, join VIX Edge for a ride in the Volatility Trading Club.


The Rundown


Capitol Gains w/ Frank Gregory
Option Pit DC and Wall Street insider Frank Gregory and I run a portfolio approach to trading options with stocks that have good long-term prospects based on Frank’s K Street knowledge and my options expertise.


  • I closed my Ford Motor Corp (Ticker: F) put flies for a 40% return on position debit. 

  • One more day for SPDR S&P Oil and Gas Productions and Explorers ETF (XOP) to pop to make this a win.


Power Income Trader:

Power Income Trader is a systematic approach to trading inflation.  By pulling real-time data from the Fed, US Treasury and Gov't, Power Income Trader alerts users on changes in money flow driven by Fed policy. Bill's system puts you out in front of the most powerful money flow in the world.


Bill is jumping into Denison Mines (Ticker: DNN) buying a dip in the price here.


Option Shopper

Licia Leslie puts on her best trading shoes to find option bargains using market making and charting experience. Generally debit options and spreads with low risk, high reward setups. Short hold times are the norm.


The Shopper puts are holding in Walgreens Boots Alliance Inc (Ticker: WBA).


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 is in wait-and-see mode on the market moves yesterday.


I closed the NVIDIA Corp (Ticker: NVDA) put flies from Tradefest for an 18% position gain and am still holding upside for a nice credit.


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 Cboe Volatility Index VIX, iPath Series B S&P 500 VIX Short Term Futures ETN (VXX) and ProShares Ultra S&P Short Term VIX Futures ETN (UVXY) options.

The Option Pit VIX Light Is Yellow. The VIX curve is at a big inflection point on whether the market falls apart or not.


I have Trade No. 277 upside still, as No. 276 fizzled on VIX expiration.


Today we see if VIX punches out of orbit.


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

This Ark Is Sinking

Yo Pit Crazies,

 

The big bull market of hopes and dreams has been dashed.

 

Now we’re living the harsh reality of less capital and no stimmy checks floating around buying any stock with a ticker.

 

Probably no fund manager was more aligned with the Meme World than Cathy Wood’s Ark Funds.

 

Tuesday  was not a good day for her funds …

 

 

Wall Street, like any other industry has fashions and fads.

 

High-growth tech was a 2021 fad that is coming to an end.

 

What will multiple contractions look like?

 

And more importantly how do we trade that?

 

Let’s take a look …

 

In 2002, QQQ was $19

That is not a typo.

 

If you had  invested $10,000 in QQQ in 2002, you would have 20x your money, which is not too bad.

 

From an investing point of view jumping into ARK funds right now, you are just making a bet the bottom is in

 

 ARK ETF Tr/Innovation (Ticker: ARK) is only 50% from its highs.  

 

Many of the dot-coms and tech in 2002 lost 80% to 90% from the top levels.

 

This is where you have to decide whether to wear the Investing Hat or the Trading Hat.

 

I think a trade makes sense, not necessarily an investment.

 

Also realize how high the valuations were on the not-profitable companies ARKK holds and you can start to see when the plug gets pulled, valuations get back to normal levels.

 

ARKK one-year chart with volatility on the bottom chart.

 

Put butterflies will work well in ARKK,with just a bear market rally hedge for an upside call.  

 

Implied vol has been rising steadily as ARKK keeps working its way down. so I would expect more lows.  

 

Wednesday is Trading Legion day and I’ll look to create a low-theta, next level trade idea.

 

The Rundown

 

Capitol Gains w/ Frank Gregory
Option Pit DC and Wall Street insider Frank Gregory and I run a portfolio approach to trading options with stocks that have good long-term prospects based on Frank’s K Street knowledge and my options expertise.

The live Power Moves Portfolio trade log is here.

 

      • I closed my Exxon Mobil Corp. (Ticker: XOM) call diagonals for 44% return.  I am running hot – nine of the last 11 opened trades are wins.  
      • If I close the SPDR S&P Oil and Gas Productions and Explorers ETF (XOP) decently this week it will be 10 of the last 11. I did miss a chance – .50 from my limit order – for a nice close today, but I think oil will still be a flight to quality winner this week.

 

Power Income Trader:

Power Income Trader is a systematic approach to trading inflation.  By pulling real-time data from the Fed, US Treasury and Gov’t, Power Income Trader alerts users on changes in money flow driven by Fed policy. Bill’s system puts you out in front of the most powerful money flow in the world.

 

Bill took profits on his long dollar Powershares DB US Dollar Index (Ticker: UUP) Feb. 18 25-strike calls for a 30% gain. 

 

Option Shopper

Licia Leslie puts on her best trading shoes to find option bargains using market making and charting experience. Generally debit options and spreads with low risk, high reward setups. Short hold times are the norm.

 

The Shopper is buying puts in Walgreens Boots Alliance Inc (Ticker: WBA).

 

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 is lookin at a lot of put that you can learn how to trade in Pro or TL.

 

Jason trading his positions like, well, a pro:

 

Big Money Flow

Each week, Option Pit CEO Mark Sebastian looks at size institutional option buying with a twist.  He mostly buys calls or puts to ride the large momentum trades.

 

Mark had two partial close of 100% and 50% today:

 

  • 7 of 10 VodafoneGroup PLC (Ticker: VOD) Apr14 16 Calls at $1.35 

  • 3 of 5 Occidental Petroleum Corp (Ticker: OXY)  Feb18 35 Calls at $3.00  

 

Mark also has a hot trade going in Pacific Biosciences Inc (Ticker: PACB) puts that are up 25%.

 

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 Cboe Volatility Index VIX, iPath Series B S&P 500 VIX Short Term Futures ETN (VXX) and ProShares Ultra S&P Short Term VIX Futures ETN (UVXY) options.

The Option Pit VIX Light Is About to Go Yellow. The VIX curve is still on contango, however, the front expiring this week might get a pop.

 

I have No. 276 and a big pop on the open for VIX could bring a nice return, so I will have to wait and see on that one.

 

Also, higher orbiting VIX is a tougher trade since the vol trends are so short and one has to take profits quickly.

 

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

 

2022 is not going to plan

Yo Pit Crazies,

 

2022 is not going to plan and conditions are changing. 

 

If you are interested in knowing what that means for your trading, consider joining Option Pit Pro and change how you trade the markets for the better, forever.

 

And if you want to see what is changing and why, keep reading … 

 

Because some big issues are afoot:

 

      • The response to Omicron across the globe, and I don’t say this lightly, could still be very disruptive
      • Rates are going up and the Fed does not have much maneuver room any more
      • Markets are expecting big gains in GDP as things get back to normal, but those are not happening as planned
      • Build Back Better is dead for now

 

Those issues, big issues, cause waves in stocks.

 

Those waves we call volatility.

 

I can trade that volatility.

 

Let’s look at what is happening now …

 

Volman Does the Two-Step

 

The thing to note is the waves of activity brought about by the Virus Scourge.

 

What I tell my students about trading volatility conditions is not how high volatility or the VIX can go. It’s how low it can go.

 

The VIX two-year chart with realized volatility is blue on the bottom chart.

 

VIX and volatility lows are a sign of how sure folks are about the future.

 

Since Omicron was announced, VIX has not gotten back to the lows when everyone thought the vaccine would solve all our problems.

 

That’s disturbing to me.

 

Think about the radically different ways countries and states are dealing with the exact same issue … that’s an indication of the confusion that could spill into the markets.

 

Stocks should be doing well because, by all accounts, bigger companies have done well navigating the pandemic. An economic boom should follow the shutdowns. And while it has to a large extent …

 

Right now there is doubt again and that creeps into market volatility.

 

Feb is the next active cycle for VIX and I don’t think VIX will be making any new lows unless a positive surprise happens.

 

Buckle up for a bumpy ride.

 

To Your Trading Success,

 

AG

Green stocks are now trash, time to buy?

Yo Pit Crazies,

 

I hope you liked the Tradefest Thursday, we will be doing more of those in the future. If you are interested in any of the slide decks hit Ted T up next week at 888 Trade-01 and he will get them to you.

 

 There were a lot of topics from our Pros but I of course liked the Cap Gains closing webinar on Green Stocks.  

 

The Green New Deal is stalled.  Hit a bump and went off the road.  It is easy to see in the stocks that are down 50% since November. The market has spoken..

Time to jump on through to see some Green Shoots.

 

The Best Time to Buy Something is When Noone Wants It

At least right now it is worth putting a couple of names on the radar.  Most of my long term stock buys have come from patiently waiting until the market just hates a sector or name.  Right now the Green Energy area, save Tesla Inc (Ticker: TSLA) cannot find a bid.

 

Time to start looking.  Stocks that are having the most problems are companies that are not making a profit yet.  They were popular with the memeers and the Cathy Woods, see Ark Funds  ARK ETF Tr/Innovation (Ticker: ARKK) devotees in 2021 but are suffering badly now.

 

What is surprising is that Solar companies make money now.  From what I can see, the top 10 holdings in the Invesco Solar ETF (TAN) are all profitable.  25% of the fund is in SolarEdge Technologies Inc. (Ticker: SEDG), Enphase Energy Inc. (Ticker: ENPH) AND First Solar inc.(Ticker: FSLR).  

 

There is a smattering of Taiwan and Chinese producers as well with many of the Chinese producers at multi year lows.

 

TAN 1 year chart with 1 day candles, 180 day implied vol in orange on the bottom chart

 

I like the more diversified hold in TAN and the quality of names overall.  The trend to buy energy conscious is not going away even with the hot money gone from the sector in the short term.

 

I am going to set up a long call with a broken put fly in for Cap Gains this week.  Pop into the class on Wednesday if you want to see me put it together.  Just call Ted this week at 888 Trade 01 we will get you the link.

The Rundown

Capitol Gains

Wall Street insider Frank Gregory and I run a portfolio approach to trading options with stocks that have good long-term prospects based on Frank’s K Street knowledge and my options expertise.

 

      • My  Exxon Mobil Corp (Ticker: XOM) call spreads are still pumping up 20% from inception..

 

Other stocks currently in the CAPITOL GAINS portfolio:

 

      • Mandiant Inc. (Ticker: MNDT) long cybersecurity 
      • SPDR Oil and Gas Explorers (Ticker: XOP) long oil
      • Ford Motor Corp (Ticker: F)
      • ExxonMobil Corp (Ticker: XOM)

 

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

 

      • I closed my SPDR S&P 500 stock trust ETF (Ticker: SPY) put and call calendars Friday for just a 10% gain.  The put was on the verge of becoming a homerun and the market once again stopped the freefall and marched back up.

 

Big Money Flow

Each week, Option Pit CEO Mark Sebastian looks at size institutional option buying with a twist.  He mostly buys calls or puts to ride the large momentum trades.

 

      • BMF closed more Vodafone AG (Ticker: VOD) for a 50% gain so far.  There has been massive call buying in this name over the last month and it is starting to move higher.

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 Roomies had some buyers’ remorse for missing some puts Mark posted. …

 

 

They traded as high as .38. 6x return!

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 Cboe Volatility Index (Ticker: VIX) future decay to pay for upside iPath Series B S&P 500 short-term VIX futures ETN (Ticker: VXX) and Pro Shares Trust Ultra VIX Short Term Futures ETF (Ticker: UVXY) options.

The Option Pit VIX Light Is Red … and I was wrong on the 16 VIX but there is next week.

 

I did close some upside in VIX and VXX this week and a little downdraft in vol will be a nice payday.

 

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

To you trading success,

 

AG