Market Recap (Week of 3.13.20)

I am going to spare everyone reading here and skip what you already know and pointing out what has already happened this week.

There, as always, are too many Monday morning quarterbacks and nobody really likes that, unless you watch CNBC, then maybe you like that.

I will comment on a few things here because maybe it will help.

• I traded through 08/09 and this was crazier
• Futures have been the go-to tool the past two weeks in this market 
• Option premiums have been exaggerated to the point where it's just ridiculous
• Liquidity was broken this week and we need to seriously figure that out
• The Premium Membership has a 10 day trial for $5 - Get it Here

Volatility, It's What's For Breakfast:

I keep hearing that the market is at a bottom and I don't really want to spend time writing, why I think it's not here in this post. 

First, volatility is amazing for profits if you know what you're doing. The way I've been trading the futures markets has been with tighter targets and less size since the ranges are bigger.

Having access to trading in the futures markets is the 'easier' play during times like this. Even if it is for the mini contracts the moves have been great to trade (or hedge out) with.

Now, the usual play would be OTM puts on VXX with a VIX at $60-$70 but the premium is just insanely (expensive) right now. I tried to short the VXX a week ago and was early. Next week I am looking to be short VOL but through call spreads or similar.

How I want to establish longs:

I want to be a buyer of ITM or near the money calls. I don't want to sell puts on this market or really buy any shares, just yet. The calls will be leaps and 4-6 months out. The 4-6 month out positions, if they get into the money at expiration, I can just get the shares at that point and I am good with that.

The reason I am sticking with this model right now is due to the liquidity issues we saw in Treasuries and a few other markets this week. That scares me.

Say that again: The buy and hold right now is not working. 

You what that usually leads to? It leads to the "They're a good company, I just have to wait and hold...I mean really...in a year we're going to look back on this and 

I saw a post from @ConvertBond on twitter and this made me look at other CDS and most of them are still tight, which, for now, is positive.

Right now I don't have much in the way of market calls or ideas until we get a more clear picture. That's important because if you don't have a plan, then you're guaranteed to get your ass handed to you in the markets. 

The best Idea I had last week came from an alert on TLT, which we placed in the Premium Room and covered most of this week. 

I know this is contrary to the stock-picking ideas that are related to Corona Virus-like GILD and CODX but this made serious money.

Energy: 

I don't pretend to be an expert in energy markets so I usually try to read research from those that are then apply trade-structuring and technicals. Right now I am focusing on building a small basket (less than 4) of energy-related names that I want to be a part of.

I do not believe, technically, that now is the time to put that risk on, but when it is I am ready. I tried to (unsuccessfully) trade a bottom in 2015 in energy and missed and that mistake won't be made again.

But, for example, XOM at $35, for a few reasons, cannot sustain. But again, I want to wait for better entry and I think we see that in the next 3-6 weeks.

The final thing I want to leave you with is this:

Remember that the markets are filled with products to trade and you don't have to go the mainstream route of buying stocks because you think its 'value' time or because there is a new vaccine possibility for Corona. 

There have been some serious moves in the bond markets and VXX this week were, for the savvy trader, it has been great. 

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