Home › Forums › Market Discussion › Market Talk 3/20 – 3/26
- This topic has 7 replies, 4 voices, and was last updated 7 years, 2 months ago by IncomeLab (Old).
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March 21, 2016 at 9:39 am #5071Steven PlaceKeymasterMarch 21, 2016 at 9:40 am #5074Steven PlaceKeymaster
PYPL relative strength play:
Simple bet here is to buy the Apr 40 calls 1.20 or so and keep them full risk. You could run a stop at the 20 day moving average but probably easier to just take the bet and let it run.
March 21, 2016 at 9:40 am #5075MarcoParticipantA lot of calls went off in pypl last week
March 22, 2016 at 10:34 am #5093Steven PlaceKeymasterKMI is back into an incredibly tight range.
If anyone recalls, the stock was headed to zero because it’s debt situation… sucked.
It didn’t help that Oil was sub 30/bbl.
Now with oil having it’s strongest month in a long time (overbought), now may be a good time to gamble on vol expanding.
I’d normally say just buy straddles but to be honest the risk here is to the downside, not upside.
If you bought a straddle and the stock rallied, it will be a tougher trade to profit from due to continued drops in implied volatility and realized.
No, it’s better to just take a gamble that it’ll head back to 15 soon.
A good long vol/long gamma bet:
Buy to Open KMI May 16 Puts @0.47
Sell half on double.
Full Risk
I’d go so far as to call these options “cheap.”
Now if oil continues to rip higher, the debt situation will improve in KMI and you could see a continued short squeeze. That’s why you want to look at buying some OTM “cheap” puts.
- This reply was modified 7 years, 2 months ago by Steven Place.
March 23, 2016 at 11:22 am #5108Steven PlaceKeymasterThe lower study on this chart is the % deviation from the 50 day moving average.
The S&P 500 was 6% higher just a day or so ago. That’s extremely stretched relative to intermediate term prices.
This also suggests that reversion is due.
March 23, 2016 at 11:27 am #5109Steven PlaceKeymasterI want to take a step back and analyze the “feel” of the market here.
Remember, it’s not just about charts on a screen. It’s the attempt to discern the motivations of other market participants.
And one of the best ways to do this is to put yourself in a trader’s shoes… or to consider what you personally are feeling right now.
That’s right, tap into your lizard brain and use that to observe the overall emotions in this market.
As it stands right now I think we went from “anxiety” around the market to a “screw it i gotta buy something” phase.
This coincided with the fact that the Fed didn’t do anything stupid during the FOMC announcement, and we ripped higher into March options expiration.
And yet… even if you do want to buy something, you’re probably pulling up a chart and looking at the market. You see the “resistance” coming into play as we head into 2100 and even though you want to buy you can’t accept these prices.
This kind of “mindset” holds true mainly for the Johnny Retail kind of trader.
On the institutional side it’s a little different.
They are currently in a “I don’t have any choice but to buy” mindset.
Because hedge funds and money managers have underperformed the market for 2 years now. They can’t afford a third.
That’s why I think some of the beaten down areas easily see rotation. And you see these quick moves with some decent volume as money managers try to chase performance.
That’s my current pulse on the market. I think we trade lower but it’s going to be really, really tough for this sentiment to shift from fear of missing out on higher prices to fear of downside prices.
March 23, 2016 at 11:48 am #5111JaredParticipant– Is there any way to set up an alert when posts are made to a thread? I see where you can get notified of follow-up replies below. But, would like it if I got an email that said someone had posted something. That way I don’t have to search the thread to see if new stuff got added.
March 23, 2016 at 4:01 pm #5125IncomeLab (Old)ParticipantJust FYI
U R HERE update
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