BY ANDREW GIOVINAZZI
February 6, 2024
Yo Pit Crazies,
Jpow is doing his best imitation of Tony “Duke” Evers in Rocky 4 before Apollo Creed goes out in a blaze of glory. Duke tries to get Rocky to throw in the towel and save Apollo from the Monster Ivan Drago. That ends in tragic sadness. RIP Carl Weathers, a guy I thought would live to 100 he always looked so fit.
Fed Chair Jerome Powell is not throwing a towel but a giant wet blanket on the whole stock market this week. He has “saved” the market up until now keeping rates moving up as the Biden Administration spends as much money as possible. Congress is abiding that spend. This makes investors nervous since the Government is the one who can screw things up big time. Just look at the spending and monetary initiatives of the last 20 years. Aside from the GFC deal that Frank Paulson got equity at fire sale prices for banks, USGOV policy has been hugely wasteful.
JPow is left holding the bag and he will hold the line on rates but that wet blanket is a thing. Modern Economies can handle unemployment not inflation. No one’s grocery bill is lower no matter how much the talking heads say. That is not stopping companies from growing in the AI world and stocks taking off. I look like I might close a 50% winner in Easy Trade Button today if the overnight bid for Palantir Technologies Inc (Ticker: PLTR) holds on.
How to stay long when some of the underlying monetary strings keep tugging at the rally?
OPM can show the way.
Learn to trade for edge
Understanding market conditions can help traders set up the trades in the right direction. Most traders focus on just the direction of markets but time and volatility matter to option traders. I set the following trade up to get long at the top for the SPDR S&P 500 Trust ETF:
OPM BTO 1 VIX Mar20 15/25 call spreads and BTO 1 SPY Mar15/Feb23 500 call calendars for a 14% gain
When stocks rallied Friday, I just closed the SPY call calendars for a 30% gain and “waited” to close the VIX call spreads until Monday. I gave myself a chance to hit a homerun if there was some untoward Weekend Risk. None really materialized even though my VIX call spreads were up a .10 or so Monday. I closed them and moved on. I had a credit going and no real risk to try and hit a homerun. That is a good place to be trading and led to 10 for 10 wins in a row here and not back record overall.
If you want to learn how to structure, manage, size and place trades like a professional with a scalable strategy, take a look at OPMentroring. I place another long calendar Monday with a SPY put hedge. I will report at the end of the week.
To Your Trading Success,
-AG
Andrew Giovinazzi
30-Year Trading Pro
See what's hot at option pit
CAPITOL GAINS: SMR Aug16 7 call closed for a 150% gain
DELTA STRIKE: VLY Mar15 8 puts closed for a 88% gain
PFE May17 26 calls closed for a 66% win
OP MENTORING: SPY Mar22/19 510 put calendars and 520 calls for 6.4% gain
OPTION SHOPPER: ERX Mar28 65 calls closed for a 90% gain