Yo Pit Crazies,
Tomorrow the Consumer Price Index (CPI) comes out. You can find a handy calendar here.
Will the inflation rate explode? I don't know about you, but I go to the market and the shelves are a lot more empty than I remembered last year. As they say, “there is a reason for everything.” With inflation raging, oil and commodities are ripping. Say hello to the “Alts.”
And Griff liked Uranium and Global X Uranium ETF (URA) was up 11.65% today. Alt energy is on fire.
Jump on through the looking glass.
Economic News can be a Vol Event
The Consumer Price Index never was a big deal when I was floor trader because rates moved up, and the Fed was not the Behemoth of the Monetary supply it is now.
The Fed is too actively monetizing government spending in a way no one thought possible just five years ago.
The Fed used to just move rates around, and the US Government did not spend too much money. Yes, it spent money, but it was not the insane level that is being proposed now. The biggest issue with Fed involvement is confidence. Traders are not furiously buying Bitcoin because they think the dollar looks great …
To be honest, inflation pressures are coming from a lack of goods moving around the way we are used to. That is what brought about a crushing recession in the 70s, and we are currently promoting policies that lead to those outcomes. That is why uranium-connected stocks are flying, even if it will take years to build a new nuclear plant in this country.
This leads me to think that tech could be waning in the short term, and commodity stocks could be booming. It’s just what we have right now.
As a trade, I like long ProShares UltraPro Short QQQ (Ticker: SQQQ) calls and long commodity stocks. That will be my Capital Gains idea today.
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.
The live Power Moves Portfolio trade log is here.
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- I closed my Moderna Inc (Ticker: MRNA) today for a small loss. The selloff in the big vaccine stock looks to have abated for now.
- Invesco Solar ETF (Ticker: TAN) is up $10 in five days, and I have shot to collect on my TAN Oct15 90-strike calls if the alts keep jumping.
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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 was cautious in the chop.
And
STC SPY Oct20 428/413/398 puts for $1.50, STC VIX oct20 21 puts for $2.15, closes trade +27%
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- Bill Griffo 12:41 PM BTO 4 $FCX Dec17 call spread 39/40 for $0.23
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Trading Legion:
The Trading Legion is an intermediate-level education and a long strangle trading vehicle. The goal is to teach students the best times to buy options.
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- I am long an SQQQ strangle that might start to pay. Apple (Ticker: AAPL) is reporting chip shortages.
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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 VIX, VXX and UVXY options.
The Option Pit VIX Light Is Yellow. The VIX of the VIX, VVIX, is still above 100, but the VIX curve is dropping back into contango (futures trading progressively higher than spot) and we should see the teens for VIX this week.
For the Vol Trade Club I closed Trade 264 for a 10% gain. I just have Trade 262 open with some long upside VIX call butterflies.
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