Fantastic IWM focus the last 2 days. The 209 strike puts went from .75 to over $5 and I was scaling out the whole way. The correlations we have been going over for the last couple of weeks are really showing how powerful they can be when the right set up presents itself. I’m done with the trade now and will focus on what the next few days have to offer.
Bond yields have spiked a lot this week as the bond market is telling the me it is expecting longer term inflation again. The Fed will either walk back their comments over the next few weeks or we are going to continue to see things like commodities go on a real run up like they have been.
You can see the rotation to commodities like energy, copper, gold, silver, and more.
I have things like FCX, EQX, GDX, and XOM on watch for this theme.
META had relative strength today when the market was very weak. I got a nice small call option trade on it but closed it out when the market stalled for a decent gain. I always pay attention to which names have relative strength while everything else is weak. That way when the market turns, the strong names are the go to names for calls. Look for the path of least resistance for trading trends. If a name is trying to go up while the market is weak, what happens when it gets a tailwind? It outperforms.
Lastly, I have TSLA on watch for weakness if it can have a good ramp up to make the reward worth it for puts. Have to see how it’s acting and how the market is before I decide on a position. They are hurt by high interest rates and weak demand right now. If the market hold up they likely chop around, but if we get an actual market drop for a week or two then this can be 150 easily.
IWM is the go to if TNX is spiking higher but it has already moved a lot so I don’t want to overstay on a great trade that played out. Let’s see how things are tomorrow.
Thanks
Valuable input here. Thanks Chris.