Yo Pit Crazies,
The holidays are about family and I am grateful for everyone who is part of the OP fam.
I truly hope the season is happy and joyful (and, of course, profitable!)
On Wednesday, the market tried to sell off but it did not quite get there
The reason for the bounce wasn’t entirely evident, but it was pretty… bouncy.
Now, there are some good stocks out there that sold off, so let’s take a look at one I like: Taiwan Semiconductor Corp. (Ticker: TSM).
Onto some good Thanksgiving reading …
Trading for What You Want
TSM is a stock I like to own around $105.
It is a hard stock to buy calls in, but it seems a better put spread sale candidate.
The implied vol jumped quite a bit so that was a good candidate for my EdgeHunter Credit Spread Sheet:
EdgeHunter credit spread sheet for TSM Dec.17 cycle
The best — as in fastest — decay for the risk dollar was TSM Dec. 17 105/110 put spread.
That is what the dark blue box tells me. This also tells me I’m selling outside the realized vol move (PINK BOX). That way I know where the strikes sit prior to selling the spread. I do expect IV to drop, plus TSM IV is coming from a relative high.
That would help with accelerated decay and a potentially faster exit on my spread.
From the Edge Hunter method:
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- Arrested Decay: The option is decaying slower than Black Scholes Model (BSM) predicts
- Accelerated Decay: The option is decaying faster that Black Scholes Model (BSM) predicts
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Happy Thanksgiving!
The Rundown
(I couldn’t stay away!)
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.
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- I added some Risk Reversals in Mandiant Inc Wednesday. Check out the latest video here.
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Other stocks currently in the CAPITOL GAINS portfolio:
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- Regeneron Inc. (Ticker: REGN) long COVID therapies
- Mandiant Inc. (Ticker: MNDT) long Cybersecurity
- PetroBras SA (Ticker: PBR) long oil
- SPDR Oil and Gas Explorers (Ticker: XOP) long oil
- Intel Corp (Ticker: INTC) long chip shortage
- Powershares QQQ Trust (Ticker: QQQ) portfolio hedge
- Canejo Corp (CCJ) long Uranium Play
- Ford Motor Company (F)
- Palantir Technologies Inc (PLTR)
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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 was Bill again!
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- Power Income closed 1/2 BHP DEC17 52.5/55 call spreads at $1.68 for a +54% gain.
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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 faded the selloff early today. This from Mark and a quick 0 to $.30
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.
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- BMF 5 OPEN Dec. 17 23-strike calls closed for a 88% gain
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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.
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- I closed all the puts Wednesday in iShares Barclays 20+ year Treasury Bond ETF (Ticker: TLT) as the TLT drop was cut short, so just an 11% gain.
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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 Red into the holidays. But with vol fatigue and higher VIX, I don’t expect very much action to be quite honest. Yet another day of the same on Wednesday.
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