Yo Pit Crazies,
Mark’s new Nitro Trader is off to a rocking start.
It is the perfect trading vehicle for this market.
Why? Because he is looking at bullish and bearish opportunities at the same time.
So you’re always in the right place and the right time.
Speaking of, join Mark, Frank Gregory and for a special Nitro Trader Mini Session today at 12 p.m. ET.
This market has a case of the Jekyll and Hydes.
And it’s suffering from something else …
Low Liquidity Is A Sign of A Bear Market
Now you say, “Andrew is calling a bear market!”
Well, in case you haven’t noticed, US stocks have not done very well since the Fed started to taper in November.
We had the Omicron bounce euphoria into the end of the year, but after that it has been rough sledding.
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- Big interest rate hikes
- Russia/Ukraine threats that have come to pass
- Total death of growth stocks
- Build Back Better spending on green is dead
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As a young floor trader, I experienced low liquidity for periods of time more times than I can count.
Paper – that is you, me now and anyone not an option liquidity provider – does not want to play in the sandbox anymore.
That is how markets slide away for a period of time.
Vol Man is spotting the candle below, and that looks like a classic bear market rally. Vicious and short in duration.
SPX one-day candles on top with 30 day implied volatility in red
Now, there are always bright shoots in bear markets.
I think renewable energy could get a boost since Vladimire Putin is making Europe’s natural gas exorbitantly expensive.
Take a look at the Guggenheim Solar ETF (Ticker: TAN) and Nat Gas producers in the US.
Bill Griffo and I have been putting out pair ideas with a long and short leg for Power Income Trader.
It seems this market will be with us for some time.
And you should be with Mark, Frank and I today at 12 p.m. ET.
The Runddown
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.
Frank and I will do some digging for natural gas in Capitol Gains in the coming weeks. I was able to add a broken wing butterfly in uranium miner Canejo Corp (Ticker: CCJ).
Power Income Trader:
Power Income Trader is a systematic approach to trading inflation. By pulling real-time data from the Fed, US Treasury and Gov’t, Power Income Trader alerts users on changes in money flow driven by Fed policy. Bill’s system puts you out in front of the most powerful money flow in the world.
Bill jumped into Palantir Technologies Inc (Ticker: PLTR).
The “Grumpy Old Men” pair trade, short SPDR Financials (Ticker: XLF), long SPDR Utilities (Ticker:XLU) is running well.
I sold the XLF puts and now own the XLU call spread for a credit until June.
Nitro Trader:
Option Pit CEO Mark Sebastian uses butterfly and spread strategy for trades that can profit in either direction.
Mark was off to a hot start with a Dow Jones Industrial Average (Ticker: DIA) call butterflies up 50% into the close yesterday.
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 had Mark calling the bottom early. Nice One!
Trading Legion:
The Trading Legion is an intermediate-level education and a long strangle/calendar trading vehicle. The goal is to teach students the best times to buy options.
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- I closed the SPDR Gold Trust (Ticker: GLD) straddle for a 46% gain on a one-day hold.
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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 Cboe Volatility Index VIX, iPath Series B S&P 500 VIX Short Term Futures ETN (VXX) and ProShares Ultra S&P Short Term VIX Futures ETN (UVXY) options.
The Option Pit VIX Light Is Green as VIX is still backwards and anything can happen.
For the Vol Trade Club I closed VXX calls in Trade No. 282 for a 140% gain and VIX puts in No. 283 for a 50% gain. Still a lot of time to play out to see how the other side of the positions fare.
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