Yo Pit Crazies,
When I woke up Friday morning I could not believe what I read about a nuclear power plant in Ukraine coming under attack.
Thankfully, flames were extinguished before the reactors were damage
But these days, that sort of news keeps coming.
No one knows what could happen next – it’s war, after all.
And it’s pushing the VIX back into the 30s.
At the same time, the global demand for basic commodities is not subsiding. It just so happens Ukraine and Russia make a lot of them.
Both are experiencing problems.
Check out a pure play here …
Mosaic Co. Is Trading Like A House on Fire
Remember when Omicron hit in late Fall and everyone thought that was the end of the world?
Well it ended up being the downside of the pandemic because everyone got some sort of immunity from the weaker strain.
Things are not always what they seem.
The Ukraine-Russia crisis is not an exception, but I know two things:
– Putin does not want to leave Ukraine
– Ukraine wants Putin to leave Ukraine
That dynamic might last a week, a month or a year.
If the West keeps buying oil and other commodities from Russia, a long slog is more likely than not.
But they might stop … and prices will go up.
Mosaic Co. (Ticker: MOS) is a fertilizer company with ties to Cargil Inc. Before all this craziness, MOS was a $40 stock and now it is near $60.
Five-year chart of MOS with one-day candles
The Fed going soft already on inflation is not going to help commodity prices. In fact with Russia and Ukraine holding such a big part of fertilizer and ags globally, the squeeze could get nuts.
Especially if the West keeps up the embargo game.
A long strangle could work in MOS with a long delta. I would look at the April cycle and keep the hold time short. Of course, this could all change.
THE LESSON: Owning strangles helps in a fickle market, just be quick on the exit.
The Rundown
Capitol Gains w/ Frank Gregory
On Friday, I was able to add some Canejo Corp (Ticker: CCJ) calls – up 42% by the close – to my put butterflies on the downdraft in uranium.
Some reports are saying the Ukrainian facility was not actually bombed, so we could see a nice rally in Uranium names Monday. All told, uranium will be the green go-to for the future.
Power Income Trader
Bill added some call spreads in the Ultrashort Lehman 20+ Trsy bond ETF (Ticker: TBT). He is short US government bonds buying call spreads in TBT.
Nitro Trader:
Option Pit CEO Mark Sebastian uses a formerly private strategy for trades that can profit in either direction.
Mark went long Marathon Oil Corp (Ticker: MRO) call spreads versus Vaneck Russia ETF (Ticker: RSX) call spreads in a pair
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 opening a few on FRiday:
I had two winners in the #FridayAlgoChalleng3, but I was not the only one. Mostly traders were trading the swings and most likely this week will be another:
Big Money Flow:
Mark leaned in Ares Capital Corp (Ticker: ARES) on Friday on massive OTM put buying.
Volatility Edge & Volatility Trading Club:
Mark and I trade Cboe Volatility Index (Ticker: VIX), iPath Series B S&P 500 VIX Short Term Futures ETN (Ticker: VXX) and ProShares Ultra S&P Short Term VIX Futures ETN (Ticker: UVXY) options in these products.
The Option Pit VIX Light Is Green, as the market for VIX futures is in full backwardation. SPX is still going up and down with around 2%+ moves per day.
I did add some VIX puts to my long VXX positions for trade 284. I am not ready to close upside VXX yet.
To Your Trading Success,
AG