Stocks post their biggest loss in a month

By Andrew Giovinazzi

July 18, 2024

Yo Pit Crazies,

Are you feeling left out and lonely next week? Well check out the Option Pit Livestream. You never know where a good idea will come from and the flow from Option Pit is pretty good if I do say so myself.

Next week we will have some of the best in the business on idea generation. This was a comment from what of our longer term students:

But what he said was true in that there is a lot of idea flow. Most folks are afraid to post ideas or observations because they don’t want to be wrong or look stupid. A subscriber will not be either if they post something. It is like a muscle that has to be worked.

Below is a 10 chart of the SPDR S&P 500 Trust ETF (Ticker: SPY). Note that it is near the same place as it was last week and pundits think the sky is going to fall.

10 day SPY chart

Well sometimes the sky will fall and the question is are you ready in your trading?

This is how to make the sky falling work for you.

Understanding the Two Way Trade and how volatility works

During the OP Chicago event I am going to discuss how to get the market to pay for all or part of trade.

Below I have an entry, exit and current price marked. For Weekly Profit cycles I entered the trade close most of it within 2 days and am now riding the VIX part for a discount to expiration. The market is just lower but implied volatility measured by the VIX is 2 points higher.

Generally two things can happen from here:

The SPY selloff loses steam like it has all year and VIX crashes

The SPYselloff picks up a bit more and VIX rallies

Once VIX starts to move, it tends to keep moving. The issue is traders are waiting for big earnings news. We will know this morning how Taiwan Semiconductor (Ticker; TSM) will play and it will set the tone.

For Weekly Profit Cycles, I should be able to close the part of my trade that pays because I know how VIX will react most of the time. Once you learn that you will trade like magic.

To Your Trading Success,