Yo Pit Crazies,

The market moves on Thursday and Friday have me thinking … How low can we go?

I remember during the dot-com crash that tech stocks lost 80% of value from the top, while the SPDR Dow Jones Industrial Average ETF (Ticker: DIA) held its value pretty well.

Tech stocks like Ark Funds Ark Tech and Innovation (Ticker: ARKK) are off 80% from the highs, so for a correction in the more speculative stocks we are well on the way.  

However, Big Tech is still holding a lot of multiples for this stage in a bull market.

Let’s consider a trade idea there.

Short Tech, Long DJI Has Possibilities

For the short tech piece, I like the Proshares Ultrapro Short QQQ ETF (Ticker: SQQQ). 

It has decent liquidity and upside call skew which means the panic area is in the upside. Call spreads are relatively cheap there. 

The long market piece would be in the DJI, a way out-of-the-money short put spread.  The SQQQ long call spread would be very close to the money and the DJI short put spread.

With the Fed calling the ball up or down on a daily basis it is very hard to lean in just one direction.  

Having a trade that pays in either direction is much easier for a short t-erm trade.

I will discuss this basic setup on Monday morning in the OP Mentoring Option Essentials class. Below is our new weekly calendar …

It’s live DAILY access to me and the OP team that you can’t get anywhere else. Join us!

The Rundown

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. 

Long-time student Kiran, rang up the win for the #FridayAlgoChallenge. I will be riding the Pro Mentoring session trade into the FOMC this week for credit. Watch it here.

OP Mentoring

I pressed my SPDR S&P 500 trust (Ticker: SPY) trade a bit on Friday by closing one put early in the day.  The SPY rally died and I ended up with a small loss on it – but better than the morning p/l as SPY went to the worst spot in the trade.

Pressing trades will be a good subject for next week's Thursday’s Trading Mechanics session.

>> Don’t miss out on that as part of OP Mentoring. <<

VIX Edge/Vol Trade Club

Mark posted a timely sale – with the help of Candlestick Queen Licia Leslie – of the VIX May18 29/42.5/55 call flies for a 38% gain.

To Your Trading Success,

AG