Yo Pit Crazies,
Want to learn to trade the candlesticks WITH the expertise of a former Cboe market maker to help you pick cheap options with short hold times?
Well, there is no better person than our own Licia Lesile — and she’s going live at 8 p.m. EST tonight.
In the meantime …
The Russians are rattling the sabers at the border of Ukraine
President Joe gave Putin a whatfor over the Zoom call and a bid cancel on the Nord Stream 2 pipeline, so maybe that will be a nip in the bud.
It would be better if the USA, instead of the Russians, sent Europe natural gas, but that is for another time.
For now, the big scary Omicron story is rapidly fading from the headlines and fading from VIX.
Let’s see how to trade that …
The Secret Is the Vol of Vol, Known as VVIX
Vol Man knows how to ride a wave on his trusty surfboard, and this wave was no different …
VIX 3 month chart with 1 day candles, 30 day IV in red on lower chart
Note the massive drop in 30-day volatility in the VIX (red arrow). I think in addition to those pesky Russians, the market is waiting for the FOMC next week.
I was a little early on my VIX Dec. 22 19-strike and 20-strike puts, but they are doing well now.
Mark is even buying the 17-strike puts in VIX in Volatility Edge for $.15. If the Fed stays the course, we’ll see 16 VIX by Friday, Dec. 17.
Ride the wave!
The Rundown
Capitol Gains
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.
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- Quieter day yesterday, but looking to add some long Brazil trade ideas or jump back into Smith and Wesson Brands Inc. (Ticker: SWBI).
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Other stocks currently in the CAPITOL GAINS portfolio:
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- Mandiant Inc. (Ticker: MNDT) long Cybersecurity
- PetroBras SA (Ticker: PBR) long oil
- SPDR Oil and Gas Explorers (Ticker: XOP) long oil
- Powershares QQQ Trust (Ticker: QQQ) portfolio hedge
- Canejo Corp (CCJ) long Uranium Play
- Ford Motor Company (F)
- Palantir Technologies Inc (PLTR)
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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.
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- Bill is still rolling great wins — and closing all of his short Bond option positions prior to the FOMC next week:
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Really, dang, Bill has been crushing and using the volatility in the bond market in his favor.
It’s not too late to catch his Power Income Trader program.
Pros can also check him out every Monday morning.
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 is still selling put spreads in major stocks and closing some VIX puts.
Susan liked:
Richard the Vet is still racking up a 100% win with the last contract closer to 1,000%.
Not that boneheaded to me.
I closed some free calls in AAPL this week for .25 that went to 1.75.
Oh, well. The moral is, if you use a stop, it will get fished and filled.
Now if the Pro room will stop making fun of me!
Robinhood Trader:
Option Pit CEO Mark Sebastian uses the Robinhood Gamma Radar to find order flow in active MEME names.
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- Mark is riding a put spread in Lucid Group Inc. (Ticker: LCID).
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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 added some put butterflies in the SPDR S&P 500 ETF Trust (SPY) around the money, thinking SPY orbits here to the FOMC.
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Big Money Flow
Each week, Option Pit CEO Mark Sebastian looks at size institutional option buying with a twist. He mostly buys calls or puts to ride the large momentum trades.
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- Mark closed part of Jumia Tech AG (JMIA) calls today for a quick 50% gain.
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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 moving to Yellow, although I don’t expect red until after the FOMC speaks next week.
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- Mark closed the VIX Dec. 22 20-strike puts at 1.25 today for VE. Mark bought 10 for .30 and started selling them for .75, so the return is ginormous. 100% to 300% in 3 days.
- I closed VTC Trade No. 272 Dec. 22 21-strike puts for a 50% and 20% position gain so far. I do want to hold the upside through the FOMC meeting.
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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
