We’re buying the $CVX January 2024 150-strike call options. Yes LEAPS!
Check out our short video with the thought process behind this trade: [Read more…]
February Strategy Session: 3 Key Takeaways
From the desk of Steve Strazza @Sstrazza
We held our February Monthly Strategy Session Tuesday night. Premium Members can access and re-watch it here.
Non-members can get a quick recap of the call simply by reading this post each month.
By focusing on long-term, monthly charts, the idea is to take a step back and put things into the context of their structural trends.
This is easily one of our most valuable exercises as it forces us to put aside the day-to-day noise and simply examine markets from a “big picture” point of view.
With that as our backdrop, let’s dive right in and discuss three of the most important charts and/or themes from this month’s call.
Shorting the Long End of the Curve
From the desk of Steven Strazza @Sstrazza and Ian Culley @IanCulley
The path of least resistance is higher for yields, as the market continues to punish investors for buying bonds.
As long as that’s the case, we want to look for short opportunities when approaching the bond market.
Since the shorter end of the curve has ripped higher, the moves in these contracts and ETFs are extended. They simply don’t offer favorable risk/reward trade setups at current levels.
We’re better off looking for ways to play rising yields further out on the curve in this environment.
We’re going to discuss how to do just that by covering a few charts that are setting up on the short side.
[PLUS] Dynamic Portfolio Management – Neutral Evidence Calls for More Caution
With the weight of the evidence turning neutral and our tactical risk management model arguing for more caution, we have reduced our equity exposure and raised some cash in our Cyclical and Tactical Opportunity Portfolios.
How To Follow Whales
If you’ve been involved with crypto, you’ve probably heard the term “whales” thrown around countless times. There’s an almost conspiracy-like aura surrounding this cohort of Bitcoin holders.
With an incredible amount of attention placed on this trader cohort, it’s important to understand their role in driving price action, macro trends, and more importantly, following their movements.
So, first things first, what even is a “whale”?
[Options] Giving It Room To Dance
[10/19/23: updated stop to 155]
We’re taking a Leap here.
The overwhelming majority of options trades we put on at All Star Options tend to be structured in a way to participate in moves that should take place within 2-8 months. The shorter duration trades are usually trades where we are net short premium (naked puts, short strangles, bear call spreads, etc), whereas our longer-term trades tend to be ones where we are net long premium at attractive prices (in volatility terms).
Today, we’re doing something we’ve never done here. We’re making a long-term bet utilizing LEAP options.
“LEAP” is an acronym for Long-Term Equity Anticipation Securities. Essentially, this means we’re taking a position in options that have greater than a year until expiration.
If you were on the @allstarcharts twitter SPACES chat this morning (every trading day at 11:30ET), you heard us riffing on today’s trade. [Read more…]
[PLUS] Weekly Sentiment Report
From the desk of Willie Delwiche.
Key Takeaway: Investor sentiment looks washed out – at least for now. Investor sentiment was a headwind early in 2021 but more recently had been a neutral market influence from our weight of the evidence perspective. Now, with the indicators pointing toward fear and pessimism and equity inflows sputtering to start 2022, it looks like sentiment now is a tailwind for equities. How long that persists remains to be seen. Seeing pessimism and fear remaining elevated even as if stocks stop going down could help sow the seeds for an unloved rally. Longer-term, there remain imbalances from a valuation and asset allocation perspective that remain unresolved.
Sentiment Report Chart of the Week: Equity Fund Inflows Sputter
Equity ETFs saw their 20th consecutive month of inflows in January, but last month’s inflows were the smallest since October 2020 and a sharp slowdown from a record-setting December (from $90B to $15B). January tends to be one of the weaker months when it comes to inflows, so whether this is a breather or the beginning of a new trend remains to be seen. Elsewhere, bond funds had their first month of outflows since March 2020 while commodity funds (which experienced net outflows for 2021 as a whole) had their largest inflows since May.
The Most Bullish Catalyst For Stocks
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