Yo Pit Crazies,
Ideas … we all have ideas.
I learned early to trade for what you see and hedge for what you don’t.
That’s something you can learn in OP Mentoring and OP Pro.
I was bullish after J-Pow’s most recent comments, basically, “We have inflation, but it is not as bad as it was, so let’s get on with it. Rate hikes are slowing down.”
St. Louis Fed President Jim Bullard had other ideas and put a temporary pitchfork in the rally, but the Fed minutes said nothing new on Wednesday, so things were looking fine.
Then the consumer inflation (PCE) data came in hot and everyone riding the rally got off the train.
Another 150 SPX points gone in a week.
So my bullish stance was wrong – and I needed a plan B.
Trading success is about Plan B. Here’s why.
Trading Strategies Need an Exit
I thought the market would go up this week, but it did not.
But I do own put spreads in SPYMaster, VIX calls in OP Mentoring and a variety of puts in my other services.
So, I still had trades that I could close and take positive dollars out of this week. If the market settles down somewhat next, I will ring the cash register on my VIX puts. I probably sold the SPY put spreads a bit early, but time will tell.
The point is, understanding where to exit a trade is as important, if not more so, than how you get in.
I still think the market will recover somewhat for the simple reason that there was not a massive selloff in SPX or a strong bid for VIX.
The PCE data was bad, too, so there should have been a stronger reaction
If I think about it, SPX already went from 4150 to 3950.
Normally a market under stress would have VIX9D trading well above the VIX. From the closing snap above, that did not happen. Nine-day VIX is 18.38 and VIX is 21.67.
If short term VIX stays lower, I expect the march to 4200 SPX to start again. At that point my bullishness will end.
The Rundown: What Is Winning Around Option Pit
Big Money Shopper
Licia rode the flow and candles to a huge win. CCL Feb24 12 puts closed for a 102% gain.
To Your Trading Success,
AG