The Jackson Hole 2 step

 

Yo Pit Crazies,

 

Every day is a day of improvement as I strive to remember what a Big Mac tastes like.

 

The real downside of the COVID recovery is an empty space where your taste buds used to be. 

 

I am, of course, still hungry for tasty trades …

 

For instance, I like the Regeneron Pharmaceuticals (Ticker: REGN) stock. If my condition went bad, my doctors would put me on that, and at $2,000 per dose it sets up a deal versus $2,500-per-day minimum in the ER.

 

I think that one still has a way to run.

 

Tricks of the Trade

 

As market makers, Mark Sebastian and I both learned tricks over the years.

 

Makes any profession easier, and they come with experience.

 

Mark is going to reveal a trick to the Robinhood Trader crew during his weekly live session Monday at 3 p.m.

 

He’s also revealing both of his watchlists tonight — one of which is only available to subscribers.

 

The good news is he’s also just opened up the monthly RHT membership again for a very limited time. (As in, it ends tomorrow.) And it’s just $99. 

 

Read on for a hint about Mark’s trick.

 

Pre Squeeze Indicator

 

When I taught market making classes, the Market Maker Risk Tab featured these items:

 

      • Delta
      • Gamma
      • Vega
      • Theta
      • Short Stock
      • Units
      • Skew
      • Term Squeeze

 

Now, I’m not going into detail of each — that’s what Trading Legion and Option Pit Pro are for — but Mark does use the short stock squeeze risk as a potential trade indicator.

 

Every time a trader shorts a stock, it adds risk to the system

 

Every time that short stock trades, hard-to-borrow (HTB) rates will uptick slightly.

 

HTB is the cost and the risk of short stock, and any trader can calculate it on the spot. It goes like this:

 

      • Add the price of the call and price of the put, then add that net to the strike price.  
      • If the call-put combo is a debit, add to the strike.
      • If the call put combo is a credit, subtract it to the strike price

 

For example …

 

Call = $2, Put = $3 and the strike is $25 … the effective price is $24 for the combo.

 

If the stock is trading $25, the call put combo is trading at a $1 discount. The $1 discount is the HTB risk and can be annualized as a negative interest rate.

 

The difference in the stock price and combo price is where the action is. Mark will make learning this easy come Monday. 

 

That is what you need to know to help see how “squeezy” a stock is.

 

Check out the Robinhood Trader trade from Mark on Friday in Support.com (Ticker: SPRT) — it went for a 231% profit when fully closed. We did a walkthrough of the Turbo Trade.

 

The Rundown

 

Robinhood Trader:
Option Pit CEO Mark Sebastian uses the Robinhood Gamma Radar to find order flow in active names.

      • Mark is rockin’ RobinHood Trader again. This time it was two Support.com (SPRT) Sep17 15/23 call spreads for $1.05. He sold one at $2.20 and one at $5.10 for a total 231% gain!


Power Income:

Option Pit Head Income Trader Bill Griffo writes the Power Income letter and now hosts the Macro Monday show for Trading Legion members — and he’s been killing it on the China trade lately:

 

      • 8/18  Bot KWEB Nov-19 55 calls @ 1.05 
      • 8/24 Sold KWEB Nov-19 55 Calls  @ 2.5  closed up 138%
      • 8/19 Bot KWEB Nov-19 45/50 Call Spread @ 1.80
      • 8/25 Sold KWEB Nov-19 45/50 Call Spread @ 2.8  closed up 55%

 

Trading Legion is leveling up with the addition of Griff, plus it’s the only place to get live access to Queen of the Candlestick Licia Leslie — who will join us this Friday on the OP Markets show.

 

In the past week alone, she’s closed trades of:

 

      • +50% in BAC
      • +85% in FCX
      • +123 in WFC

 

Of course, that’s all in addition to Trading Legion’s 4x weekly live access, small group mentoring sessions, custom courses and weekly trades.

 

If you’re ready to step up, or just want to learn more, give our Customer Care Team a call Monday-Friday at 1-888-872-3301 between 9 a.m. – 5 p.m.

 

And be sure to mention that you read Option Pit Exclusive today to claim a special offer.

 

To Your Trading Success,

 

AG

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