Hugs not Drugs
S's over N's!
The tape in headlights opens for action and if feels like trader types are poised to pounce -- they're just not sure which way yet! The NDX tickled and tested the 1020 area and is finding some bids as a function of support. If you pull up a NDX 21-day chart, you'll see what they see -- this level MUST hold if Snapper wants to come out and play.
The banks stand out early (up a quick percent) and that's emboldening some bulls to edge into the mix. I see the importance of S&P 860/NDX 1020 and IF you're sportin' Hoofs, you can use those levels as defacto stops. Me? I made partial put sales in some names (that are lower) and rolled some in-the-money puts back down (dollar neutral) in others. What do I mean? Take a look.
I nibbled on 500 Goldman Sachs (GS:NYSE) May 75 puts into Monday's opening spike. Tuesday, as the stock slipped into the bell, I sold 250 of them (discipline) and carried the other 250 into today. This morning, as I was walking through my exposure, I decided to sell the 250 May 75s for 4.40 and buy 500 May 70s for 2.20. I did this trade for "even money," (it didn't cost me anything) and picked up some "optionality." Now, if I choose to play the gamma goblin, I have a better vehicle. Follow?
A quick check of the tea leaves shows firm breadth (3:2 NYSE, even NAZZ), a flat dollar, slippy bonds (watch those), soft semicaps (it's early) and, perhaps most importantly, a fugly biotech sector. This group has acted as a decent "leading indicator" for the Nazz and it's certainly worth a mention. In fact, pharma is softer across the board today -- specialty, drugs, bios -- and that stands out to me.
I'm sitting tight with my one leg in the fur and I understand that I may have an opportunity to make higher sales. That's my game plan/strategy for now as I attempt to use price to my trading advantage. I've gotta jump, my friends...fare ye well.
And Fokker -- get off the babysitter!
Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at firstname.lastname@example.org.
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