Yo Pit Crazies,
Joe spoke.
Markets moved.
It was not as bad as some folks thought (including me).
Omicron is the thankfully weaker sister of the COVID family.
The S&P 500 rallied!
And we had a bang-up time in the Option Shopper yesterday!
There was a schism, a break in the force, so let’s see what it was.
It Takes Two to Make a Market
Licia the Queen of the Candlesticks likes Zoom Video Communications (Ticker: ZM).
The sticks look good and ZM appears poised for takeoff after a massive candle lately.
On the other side of the market, Mark thinks with the reduction of risk from Omicron, ZM will be vulnerable to a pullback a la Peloton Interactive Inc. (Ticker: PTON).
His reasoning is, if folks don’t need to telecommute, there will be less demand for the product.
ZM 3 month char with very low IV (in red) on bottom chart.
I will come in as the tie breaker and say … why not both ways?
The downside put flies are not expensive and a 210 call is not terrible for January with the lower vol. The put fly can hedge the call for a funky strangle.
Mark and Licia both think ZM is poised to move. It would not be the first time I was a peacemaker in The Pit.
The Rundown
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.
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- Licia is loving some Canejo Corp. (Ticker: CCJ) that are up smartly already.
- Want in? You’ll have to call Customer Care at 1-888-872-3301.
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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.
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- I closed some short Ford Motor Co. (Ticker: F) calls for a nice gain and will ride the Jan calls up to make the diagonal pay.
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Other stocks currently in the CAPITOL GAINS portfolio:
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- Mandiant Inc. (Ticker: MNDT) long cybersecurity
- SPDR Oil and Gas Explorers (Ticker: XOP) long oil
- Cleveland Cliffs Resources (CLF)
- Ford Motor Company (Ticker: F)
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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 added some iShares Barclays 20 year Gov’t Treasury Bond ETF (Ticker: TLT) put spreads into the rally. This could just be a knee-jerk reaction from bonds to Omicron and he was right with a 75% gain in the put spreads.
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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- American Airlines Inc. (Ticker: AAL) calls flew for Mark with a 56% gain yesterday.
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Robinhood Trader:
Option Pit CEO Mark Sebastian uses the Robinhood Gamma Radar to find order flow in active MEME names.
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- Mark added some Pro Shares Trust Ultra VIX Short Term Futures ETF (Ticker: UVXY) puts that are moving nicely in the right direction.
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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 was looking for a bounce back near 470 yesterday. It is looking more realistic today.
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 will add a new TL trade today during class. We will cover long-term put management.
Here is the replay from last week if you missed it.
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 (VIX) future decay to pay for upside iPath Series B S&P 500 short-term VIX futures ETN (VXX) and Pro Shares Trust Ultra VIX Short Term Futures ETF (UVXY) options.
The Option Pit VIX Light Is Moving And Still Yellow. Realized vol in SPX is still very high.
Mark added UVXY puts for the December cycle. The paid nicely yesterday, but are not closed yet.
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
