We got a sharp sell off this morning in tech after a Google Next event that negatively impacted NVDA which was down $40+ at one point before recovering $20 of that. The SPY broke down below the 21 ema and recovered for now. Really, today was just a day for people to de-risk before CPI tomorrow. I don’t think anyone out there is looking for CPI to be anything but hot, the question is how hot will it be.
With events like this I always get questions about how to hedge positions that people don’t want to sell and the answer is, collars are your friend. A collar is a bit like a risk reversal, but the other way and around shares that you have. Hypothetically lets say you have 100 shares of a stock worth $100, you could do something like sell 1 call overhead and use the proceeds to buy puts. That would protect you in the event of a decline and should the stock go up, you still partake in the upside. You can read more about collars with a google search. Otherwise, you can just buy puts if you’re concerned.
Mostly I would say unless you’re in some short term positions, I wouldn’t get too worked up over whatever happens tomorrow. Earnings the next couple weeks will have much more of an impact on markets than CPI tomorrow will.
Recent Trades
While MTCH from this weekends best idea being up over 4.5% in a red tape is exciting, AMKR from yesterday’s recap is the one I want to highlight as its up 8% today
If you remember yesterday 1000 calls came in and in 2 years of doing this, I had nothing in my notes ever in this name, that was remarkable timing and intuition from whoever put this trade on. My guess is they worked at Needham or know who upgraded it to $40 this morning. Either way, if you tagged along, well done.
These obscure tickers remain unbelievable pockets of alpha in these daily recaps. They’re just so egregious sometimes and you can’t help but smile watching it not even 24 hours later. Also an analyst on CNBC just randomly recommended it minutes ago. Hilarious.
Trends
One thing you’ll notice is the last couple weeks, very few of the megacap tech names are popping up in the trends. Even a name like NVDA which had led for so long doesn’t even appear in the past week, they completely quit buying it before this dip.
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Today’s Unusual Options Activity
Here is today’s link to the database, as always it will be open till tomorrow morning at the open and the rest of today’s trades will be added by the afternoon.
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