Gobbling Gains Around the Election

Hello Pit Crazies,


Frank Gregory and I hosted a “crossover event” yesterday, bringing Capitol Gains into the Big Money Flow show to discuss the politics/volatility relationship. Check out the replay here.

During the session, we added a trade for the iShares MSCI Brazil ETF (EWZ), based on the current turmoil in Brazil

Two things are piquing my interest for next week and the broader markets:

      • The Election
      • The Fed

Both are Vol Events, but are not quite what they seem.  I will put it in Frank Gregory’s words once you jump on through the looking glass.

Frank Says …

The market does not like unrealized capital gains or IRS access on $600 transactions in the $3.2 trillion spending spree.

With Joe Biden putting in so much time on the Virginia governor’s race, there must be a reason.

And that reason is the spending bills are snagged and Joe needs a win. The stock market does much care for the spending grab, and a loss in Virginia is likely the nail in the coffin for it.

Taper Next Week

The Fed should announce the end of the bond buying program, with the wind down happening sometime next summer.

Will they hold the line?

Stay tuned, but I think the market is expecting yes on taper.

Both of these items portend a bid for VIX and volatility at least until Nov. 3.  That makes 

SPDR S&P 500 ETF Trust (SPY) calendar trades — buying Nov. 05 and selling Oct. 29 — look very interesting.

As of now, the market is expecting a very watered down (at best) Green New Deal and taper to commence. Anything else will be a surprise.

I will examine the trade idea in the Trading Legion today. Want in? Call Customer Care today at 1-888-872-3301 starting at 9 a.m. to see how.

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.

      • SPDR S&P Oil and Gas Exploration ETF (XOP) is still humming along up 10% from entry.

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 used the rally yesterday to take profits and is awaiting the next Big Tech earnings …

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.

      • International Game Tech Inc. (IGT) is back on the Flow Chart!

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

      • I closed the last SQQQ Oct. 29 8-strike puts yesterday in my strangle. That left me with a call spread for a slight position credit going into Friday.

Volatility Edge & Volatility Trading Club:

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

The Option Pit VIX Light Is Red, and we could see a much lower VIX and VXX next week.

For VIX Edge, Mark closed some UVXY put butterflies for a 44% win and still owns the Jan. 2022 5-strike puts for a big credit.

For the Volatility Trading Club, I closed some VIX Nov. 17 18-strike puts at $1.40 and a 35% gain today.

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,


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