Should We Be Scared?

Yo Pit Crazies,

 

Frank and I are going live with a Capitol Gains: October Surprise preso on Thursday at 8 p.m., so be there. We’ll ID the sector that’s going to explode into the new year and beyond, plus give you an update on the Cap Gains portfolio and an exclusive trade!

 

SPY did what is known as “fill-the-gap” yesterday — or very close to it.  The strange thing is that it should not be happening. 

 

Congress is all good and there is no debt limit nonsense, right?

 

So something else is afoot.

 

VIX is up and it might be trouble …

 

Debt Limit Crisis Settled, Right?

 

Not exactly.

 

So from my source, Mr. Frank Gregory, Sen. Mitch McConnell’s debt ceiling moves were mostly to buy some space and time for less “progressive” changes like changing the Senate rules on the filibuster. 

 

I am not sure how it will play out, but the SPDR S&P 500 ETF Trust (Ticker: SPY) is doing that for us. VIX, too!

 

      • SPY down.
      • VIX up.

 

They should be going the other way if the news was good …

 

SPY 1-min candles for the last five days. IV on the bottom.

 

Implied volatility spiked from just over 14% to 19.43% in the Oct. 15 cycle. 

 

None of this is good news for stock prices. 

 

More treatments are coming for Covid in pill form so this new market pullback is something different.

 

I closed 80% of my VIX puts for decent prices yesterday.

 

The Lesson: I don’t like it when VIX changes direction when it should be in a freefall mode.

 

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.

 

      • Did I mention we’re going live on Thursday?

 

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 thinking caution yesterday and closing some VIX and VXX puts:

 

Bill Griffo  1:27 PM– BTO $SQQQ Oct15 8.5/9 Call Spread for $.10

Cat  12:18 PM  STC $SLB +41% – this is the earnings trade that I put on on Friday

 

Big Money Flow:

Each week, Option Pit CEO Mark Sebastian looks for high volume, market turning action to create retail long and short trade ideas.

 

      • International Game Tech Inc (Ticker: IGT) is closed for a 46% win now net on all contracts.  

 

Trading Legion:
The Trading Legion is an intermediate-level education and a long strangle trading vehicle. The goal is to teach students the best times to buy options.

 

      • I own a Proshares Ultrashort QQQ ETF (Ticker: SQQQ) strangle that could jump today if Powershares QQQ Trust (Ticker: QQQ) selloff gets worse. Griff jumped on a similar idea yesterday.

 

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 VIX, VXX and UVXY options.

The Option Pit VIX Light Is Yellow. VVIX is still above 100, but the VIX curve is dropping back into contango and we should see the teens for VIX this week.

 

I closed 2 VTC trades yesterday, closing the extra puts I had for trade No. 261 for 21% gain and 260 for a 2.5% gain. 

 

      • Trade No. 262 I have the puts paid for. Now I need a jump in VIX to make the calls pay.
      • Trade No. 264 I own the VIX Oct. 20 25/35 call spread for a credit.  

 

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

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