Yo Pit Crazies,
Regular readers here know that politics have creeped into the conversation more than once.
We have the Fed minutes coming up today, and while that is more economic policy than politics, Frank Gregory has pointed out that line has blurred quite a bit over the past three years. We cover that at Option Pit in Capitol Gains and Power Income Trader.
Brazilian President Lula is visiting China – and a good deal could be on the horizon. I am noticing some interesting goodies in the iShares MSCI Brazil Index ETF (Ticker: EWZ).
Not the least is the massive call buying.
See what that can mean for you.
The Chinese Want Brazilian Raw Materials
Frank and Griff have mentioned loud and often that the world is moving away from the dollar.
That means other currencies or gold will replace the dollar as a reserve currency. The World Economic Forum must be thrilled their diabolical plan is coming together. Either way, EWZ moved 5% Tuesday.
That is a huge move higher. What does the EWZ have? Oil and commodities is the biggest weighting in that ETF.
I am short some put spread in Cap Gains in Petrobras SA (Ticker: PBR) but will look at Brazil again today as a way to ride the commodity train higher. Also, the dividend yield in EWZ is currently well over 10% (and closer to 20%) on the lower price of EWZ and higher commodity prices.
I don’t see that dividend yield holding forever and it does cause big stock drops ex-div, but that will entice people into the name nonetheless.
This dollar story is bullish for gold and silver. The Biden administration is floating more EVs out there. It’s doubtful there is enough raw materials to create all the batteries to fulfill that demand. Just another reason for a commodity rich country like Brazil to fly.
The Rundown
Cap Gains
I closed a Southwestern Energy Corp (Ticker: SWN) 1×2 6.00/5.5 put ratio spread for a 100%+ gain on credit.
This trade took an interesting path in which the stock closed at $5 on Friday from the $6 price on entry.
The ratio spread entry price was even money and I sold one of the 6.00/5.5 put spreads at .49 credit, leaving me with a $5.01 entry on the stock price.
I closed the stock at $5.23, netting me .22 per 1×2 put spread. I turned a .01 debit entry into .22. (In for a .01 and out for .23.)
To Your Trading Success,
AG