As noted two days ago, we are not surprised the markets have sold off for mysterious reasons. I have also been starting threads warning people about volatility - of course only to be attacked and berated the entire time. That’s okay!
Well… not so mysterious reasons today.
Today marks the 30th anniversary of Black Monday. The news wires are also trying to blame spain tensions, China GDP growth at 6.8% or earnings disappointment, but those are just the usual finger pointing that means absolutely nothing. The reason for this is superstitious, many traders pay attention to things like this, the ones higher up even pay attention to astrology. You won’t hear that report in the news! Volatility signals two days ago simply pointed to the buyers coming in to hedge their portfolios.
Here’s what to expect.
#VolatilityPRO
This will actually be our best performing program today. I knew it was possible that the VIX would pop - so we initiated our new short positions 100% covered with the new barrier @ 12 versus @ 11 as we had last week - this was a great move as the VIX is currently trading @ 11.33 - We were also long 150 VXX contracts into the close, thus we are over covered at this time. I am likely to add more to the position uncovered, which will move into covered mode into the close, or on an intraday basis depending on fills. This may or may not happen today - further activity.
#NasdaqPRO
Expect 1-2% drawdown here.
Our Nasdaq futures hedges triggered in a not so perfect zone today and I cut them for a loss this AM. However, what if the market did melt down? That order would have pinned the DD @ 2% where it would have stopped and others would have blown up. This is worth the insurance, however ideally in hindsight the order would’ve worked best triggering around 6090 but we are currently trading now at 6085 - so this was a tight level. The point is - the program was hedged for this type of event, and today we paid a small fee to ensure your account doesn’t blow up.
Here’s what to expect trade wise.
I will be initiating a bull put spread on the QQQ 147 barrier expiring end of week because I already have signals this sell off has shown signs of reversing. More than likely - this turns into a BUY THE F* DIP montage as we all have heard this screamed out for the past 4 years. BTFD. Yes, days like today freak people out, but more than likely, funds buy this. This is not real selling, it’s just real selling based on what we have seen the past two months. When the trade expires I will consider getting long NQ futures / and or continuing to sell premium on the QQQ call position. We are closing out the SQQQ hedges and DEC 147 puts here. We could’ve bought more SQQQ into the close, I will consider that an error on my end.
#OptionsPRO
Expect 1-3% drawdown here.
Most of the options barriers this week should expire worthless, I think Alibaba will hold and pay off nicely. I may close out all covered call positions here for a profit. NFLX and APPL will weigh down the portfolio, however I will be adding intraday hedges that will trigger puts if the market melts down. There is no way on an options program like this can not take on a drawdown on days like today, it’s just the extent of that drawdown that matters. This should be the worst performing program today.
With that said… traders needed a day like today badly, I am looking at my signals now and I do believe this sell off is contained, that’s not to say it won’t change, but it does look this way right now. If the market behaves orderly at these levels, it opens up significant opportunity for me next week and to close out the month.
I will be very very busy today and cannot answer questions in PM unless from current subscribers.
My programs are free, and they come with constant communication and hedging.
Please be safe today and do know that it’s a good day to evaluate your traders. 1-5% DDs on a morning like this are reasonable depending on the program, beyond that is not reasonable. A median DD on a day like today of about 2.5% would be ideal, especially if you notice the trader had hedges on, whether they won or lost ,doesn’t matter, they should have had something trigger overnight if they also use futures. Consider your open risk and evaluate the programs. If you would like an opinion on a program and their activity today, feel free to send the information over.
