Yo Pit Crazies,
According to reports, Apple Inc (Ticker: AAPL) paid the largest street tax IN HISTORY in 2016, shelling out $275 billion to appease China in 2016.
That’s billion, with a b.
Since then, AAPL added $2.2 trillion in market capitalization. So I guess it was a good deal. I can see where the Trump tariffs in 2018 came from.
The story for today is the Invesco QQQ Trust Series 1 (Ticker: QQQ). Will it ever drop?
Speaking of drops, President Biden let something drop, as well.
Let’s see if the volatility can tell us anything …
Is QQQ IV Saying Anything?
After the rubber ball bounce, QQQ has been relatively flat the last few days …
QQQ IV on the bottom half of the graph in red, yellow and green for Dec. 17, Dec. 22 and Jan. 21.
The initial giddiness over Omicron being less destructive than the government’s reactions to it seem to be wearing off. Note in the bottom half of the graph above there was a massive drop in implied volatility in QQQ.
The last 3 days there was mostly flat IV coming from a huge drop. The EOD yesterday picked a bit after President Biden let slip some issues surrounding the CPI number. A big CPI might give us a more aggressive Fed tightening, which this year has not been good for stocks.
I kept some QQQ put flies I own (in Capitol Gains and Volatility Trading Club) to see if this pans out today with VOL MAN surfing the wave higher on Thursday.
I still think we see a lower VIX by the end of NEXT week, but this is a new bump in the road for sure.
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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- My QQQ put butterfly is picking up steam. There could be some serious shifts next week if Powell hits the gas pedal on rates, but I will close it if I see some real dollars out of it.
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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, after a raft of great closes this week, is looking into Energy Transfer Partners LP (Ticker: ET) for an income play. Stay tuned!
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One more for the road this week …
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 sat somewhat pat on Thursday. Lithium is getting a lift …
Ken bringing in the bacon from a supremely managed Trading Legion idea:
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 closed a Lucid Group Inc. (Ticker: LCID).put spread for a 30% return. He is diving into DraftKings Inc. (Ticker: DKNG) with some long calls.
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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. Up around 15% so far.
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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 (Ticker: JMIA) calls Thursday 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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- I closed VTC Trade No. 271 Dec. 22 20-strike puts for a 15% position gain so far. I do have a QQQ put fly and VIX put left open and will close what pays me first.
- VTC trade No. 272, I got paid 8% to own the VIX Dec. 22 23/30 call spread. My guess is VIX gets jiggy into the Fed before selling off.
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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