option mentoring

Trading Gold

Tech is still where it’s at with most of the big names reporting earnings beats.  Even lowly TWTR managed to squeak out a big move up now that profitability looks much more likely.  Long term IV is still cheap in there.  Evaluating volatility and position structure is a learned skill and that is what we teach in our Gold Course.

The Trade

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Will Super Mario save the day?

For a few moments today VIX went backward and traders decided to worry about a tax plan, ECB rate hikes, FANG earnings and whatever else ails a screaming stock market all at once.  I don’t see many backward to VIX cash markets at 13 VIX but we had one today.  Usually VIX traders have a reason to let VIX cash fly.

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Will GE do it or not?

Not so quietly GE has fallen from the low 30’s into the low 20’s with SPX and INDU making all-time highs.  Massive asset sales could be on the block and the equally massive 4.4% TTM dividend could be on the block too.  I think most of the weakness in GE is centered on those issues.  Option Pit is giving a free credit spread webinar tonight so this is an inkling of that.  And no GE will not be the topic.

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The 3 day rule

The 3 day rule

No, I did not invent the 3 day rule, but I like it.  In the old days a stock that went up 3 days in a row was susceptible to a pullback.  The 90’s put the rule on hold and QE messed with it as well.  Basically it is the old tape readers logic that 3 days in one direction is not sustainable.  With equity prices it is not a bad swing run timing thing, but it works very well for volatility, QE be damned.

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Is Catalan secession a problem for the Euro?

There was a time not too long ago where any hint of Euro disunity caused big ripples in the markets.  We had the Greek elections and debt crisis and MF Global blew out on what turned out to be a good bet long PIGS debt.  Spain is having a mini-crisis around the Catalan state leaving and US markets mostly shrugged.

 

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AAPL Watch don’t work

I was expecting maybe more fireworks out of the FOMC but got very little.  The Fed will unwind their balance sheet by the time I am 82.  That reminds me of the old cathedrals that took generations to build where the father passed on the skills to the son.  Now we just pass our debt to the next generation.  Either way VIX closed sub 10 for the first time that I can remember on a FOMC day.  The rate picture is clear for near forever in market terms.

 

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What, AMZN selling car parts now so ORLY goes to 0?

Actually, I don’t know if AMZN sells car parts.  I know that my small town has several auto parts stores that supply all the mechanics and that ORLY is one of them.  ORLY also sold less than everyone thought they would.  As of today with ORLY the market thinks that business has its best days behind it.  Volvo offering all electric or battery models in a couple of years is not helping the auto parts stores either.

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