We gapped down on some more tensions in the Middle East. The escalation of the war last night with the attack on the hospital was not what the market wanted to see in terms of a potential calming of tensions. Oil rocketed over $89 but gave alot back, the VIX was up nearly 10% and the TNX is sitting at highs over 49. The amount of fear from all sides is high, and markets hate question marks, but the VIX has not really signaled a big escalation in fear yet.
Look at this TNX it is nonstop, I do think 50 should be about the top, its a big fib level but we will see, we’re nearing a 50% run on treasuries in just 6 months. This is a once in a lifetime move and while equities should be much lower, they really haven’t been too concerned with this.
Today begins the big earnings reports with Tesla and Netflix. Tesla surprising is going into this report with the lowest implied volatility it has seen into earnings in a very long time, the market isn’t expecting much, contrary to what you hear from most investors where it is retails favorite name. Netflix will be another to see where consumer sentiment is, are people holding onto the subscription or cancelling it? Of course the most important names are next week regardless of what happens today. As long as we’re over that 200 day just over 420, the bulls are ok.
Trends
The TLT has overtaken the top spot in the short term trends. It has a very nice double bottom setup, that makes sense. Lots of smaller names like INMD,MASI, and U are showing up in the last 2 weeks as bullish.
1 Week
2 Week
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Today’s Unusual Options Activity
Trades Of Interest
PSN - Parsons is a name that does well with all these other defense names that love the chaos going on overseas. It isn’t one of the ones like LMT or GD that you always hear about but look at the move from early October until now. Today 2000 calls were bought at 60 for December and this name never sees any options activity. Very notable…..
AMT - I wrote this one up a couple weeks back and today it saw a very interesting trade selling deep in the money puts at 175 and buying that same strike 175 calls in November. These can payoff nicely with just even a small move up in the next month. It rejected the 8 weekly ema again this week. I still like put sales lower as this is a very good name to have in your portfolio.
PINS - Pinterest recently gave us that big guidance at their investor day. You still have a well known activist like Paul Singer heavily involved here and nearing 100% return on his entry last year. Today it was 2300 puts sold at 27 for next week. Their partnership with Amazon should finally start showing some numbers this quarter on the report. This really has room to run if advertising names don’t dump in the next few sessions. Put sales below 22.5 a few months out look like a good spot to put on a long position.
APO - For the 2nd time this week we’ve seen a massive buy of APO 2026 calls at $135. Look you don’t see 50% OTM calls bought on names in this kind of size often. This isn’t a hedge, these alt managers are built for these times where they can scoop up assets on the cheap. BX,KKR,ARES,APO all will do well in this environment but they do trade inline with tech stocks mostly, so you can’t believe these will work and the /NQ won’t. I still think puts sold at 75 and lower look like a good spot with decent support to start a long.
UNP - Union Pacific had an incredible earnings reaction last quarter and just sold off all quarter long, that doesn’t happen often. Today someone sold 500 puts at 195 for January 2025 which would put them in below 190 and looking at the chart below, that would be below support. I like that trade alot. Rail is the most efficient method of transportation and will always have a place in our economy.
On a personal note, I got some pretty bad news yesterday regarding my dad. As you know in the summer I was dealing with taking him all his radiation appointments and after we get the all clear in August, it appears his cancer has returned and is stage IV having spread throughout his body. Unfortunately he’s dealing with a rare form of cancer called Merkel Cell Carcinoma and the prognosis is not good, even if the chemotherapy they’re starting right away works, we were told to expect maybe 2 years and alot less if it doesn’t. I of course am going to have alot of days in the near future where something pops up and I’m going to have to miss a recap or something. I hope you all understand. I always get this recap out by 12:30 CST everyday and if for some reason you don’t get one by that time, just know something out of my control has happened and I needed to go help with something.
I really do apologize, but I am an only son and my mother is too old to care for him by herself, chemotherapy is a very tough task and my help will likely be needed with appointments and other things. I hope there will be no disruptions here, but I’m just letting you know in advance that some may occur.
I never tell you all, but it is nice having so many of you in the discord, having 500 of your friends around at all times to talk is just something great that every person should have access to, we’ve built something great in there. These last few days have mentally drained me but having so many of you around to chat whenever has definitely lifted my spirits. So thanks for all that.
Anyways, have a great rest of your day and I will see you tomorrow.
Thanks for the great write-up man, praying for you and your family
Cherish the time with your dad James, I now sure wish I did