BY ANDREW GIOVINAZZI
April 12, 2024
Yo Pit Crazies,
This chart below shows VIX is back to the lows of the week as of Thursday night, Today is a different story. It also tells me SPX is putting the inflation picture behind it and any July Interest Rate shenanigans.
VIX 5 day chart
The chart below is the polar opposite of VIX.
A chart of a company I like is Chewy Inc (Ticker: CHWY). I got put shares at $21 and bought some more in the high teens only to watch it go to $15!. Ugh!
20 day CHWY chart
There is a practical use to options when I want to relever a trade. It is one of my favorite ways to use calls ideally suited for options.
You want to see what I did?
I sold some stock and bought 4x the potential delta in options
The reality is 500 shares of CHWY was $7000 at least. If I dump my shares and buy 20 long term calls I get 4x the potential delta near the bottom of the stock. October calls were very low volatility so I got 20 calls for $3000. If CHWY goes back to the $25 where it was when I was singing the happy song I will do roughly 3x better on a fraction of the cash.
Below is the stream of consciousness you get in the Pro Chat room. Take it or leave it.
If the stock craps out more, it could happen, I can write puts and start over again since I will have some dough left over. Stock replacement can work if the company is good enough and CHWY has been putting up growing revenue but does not rhyme with AI. I like making longer term investments in companies with growing revs that the market hates.
As long as the revs grow, the stock will eventually catch up.
To Your Trading Success,
-AG
Andrew Giovinazzi
30-Year Trading Pro
See what's hot at option pit
CAPITOL GAINS: SMR Aug16 7 call closed for a 150% gain
DELTA STRIKE: VLY Mar15 8 puts closed for a 88% gain
PFE May17 26 calls closed for a 66% win
OP MENTORING: SPY Mar22/19 510 put calendars and 520 calls for 6.4% gain
OPTION SHOPPER: ERX Mar28 65 calls closed for a 90% gain