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Thursday, February 29, 2024

Options Expiration Friday – Anything Can Happen

SPY 5 MINUTEAnother crazy day ahead

What else is new in this market?  As you can see from Dave Fry's SPY chart, the pattern is holding up of high-volume (relatively) sell-offs following low-volume run-ups.  This is how the Institutional Investors manipulate the markets to dump unwanted shares on retail investors.  I've been telling you all week how it works and now we can see it in action.  

Of course, it's nice to have this knowledge ahead of time – that's the edge we strive to give to our Members at Philstockworld.  Even if you are just reading us for free and don't have access to our Live Member Chat Room, you would have done very well to follow our advice on Tuesday and go with the DIA puts at $166.80 and the DXD longs at $26.20 – it was right there on top of the morning post (which you can have mailed to you every day, pre-market by SUBSCRIBING HERE)!  In our Member Chat, the previous day, our trade ideas were:

A 5% pullback on DIA is 8.3 points (830 Dow points), back to $158.40 from here.  The June $161 puts are .95 so, if you have $100K to protect against a 10% drop, you can buy $5K worth of the June $161 puts and a 5% drop pays you back $8,000 and a 10% drop to $150 (15,000) would net you $11 per contract so a 10x return is $55,000 back – that's overhedged actually!  

On DXD, the July $25/28 spread is $1.10 and is $1.25 in the money so you get all the upside on DXD up to a 140% profit on a very small move down in the Dow.  We already have July $28 calls in the STP and it's a little too soon to roll but we will.   

On a new trade – you can just get out if the S&P holds 1,900 for more than a day – that's not too far from here.  

INDU WEEKLY$5,000 worth of June $161 puts were cashed out by us yesterday at $1.40, which would be $7,240 on 53 contract, up 50% in 3 days and the Dow has barely even pulled back!  That's $2,240 in your pocket to compensate for any longs you may have left on the table.  The reason we cashed them out is that we expected a bounce today – into the close of options, but we still have our DXD spread, now $1.45 and up 32% out of a possible 172% – so just on track to our goal

So $5,000 in each trade as a hedge would have returned $3,840 in 3 days – aren't ideas like that worth the $1 a day an Annual Report Membership costs?  I know $1 is a lot of money, in our Live Weekly Webinar on Tuesday, I pointed out to our Members that every $1 you spend today costs you $5 in your retirement – but that math only works if you instead invest it wisely.  Of course, the $3,480 you didn't MAKE this week by not spending $7 cost you $19,200 in your retirement – so I think it's a pretty good value proposition, don't you?

Anyway, so how did we know the market was going to turn down.  Well, I posted the link above to the week's post, where I laid out our bear case as strongly as I possibly could but I think this chart sums things up very nicely.  Institutional Traders (ie. Banksters) have been dumping out of the market while their pet Media Clowns (ie Cramer) herd the Retail Sheeple in to buy up the shares.

The "smart money" has left the building and is still leaving every day we have volume while their TradeBots pump the market back up on slower days – so they can get as much as they can for those last few shares in their portfolio.

I've been telling you this for months, David Tepper told you yesterday (see yesterday's post) but, sadly, even just 6 years after investors got very badly burned chasing a stimulus-induced rally – they are jamming their hands right back into the flames that are being fanned by the same Mainstream Media Assholes that screwed them over the last time.  

I say it often enough that you must be sick of it by now:  I don't care what the PRICE of the stock is, I care about the VALUE and, like David Tepper and Warren Buffet – I am just not seeing a lot of VALUE at these PRICES.  We did find 9 value plays this week in Member Chat and we'll go over a dozen more over the weekend but, so far, we haven't pulled the trigger on any of them as we're waiting to see how severe this pullback will be.  

Meanwhile, by combining fast and slow-moving hedges, we're able to take some quick profits off the table while maintaining a very nice upside (140% still to go) on our more conservative hedge.  Not only that but, since we have been drilling our Members on Futures Trading this year, we were able to take advantage of the intra-day bounces.  In our Live Member Chat Room yesterday, at 12:58, I said to our Members:

Gotta like playing /TF long at 1,080, just for the small bounce.  

/TF is the Russell Futures, one of our favorite day trades and it pays $100 per point, per contract when you get it right and boy did we nail this one:  

By having plenty of tools in our trading toolbox, we are able to make money in both directions on the same day.  Other than that, the only other trade we made all day was a bullish adjustment to our CMG spread, as that stock dipped down to $491.  There's another free idea for you – it may not make as much as our option spread from Member Chat, but it should do well into the fall, when margins begin to correct.  

Today is going to be another watch and wait day.  If you are a free reader, you can still get in on the DXD spread, that still has 140% more upside and we certainly want to be well-hedged into the weekend.  I'm sure we'll find something more aggressive than that in Member Chat – it depends how high they manage to take the indexes before the selling kicks in again.  

Meanwhile, enjoy it while you can – as Stephen Colbert points out, we're all screwed anyway:  


Have a great weekend, 

– Phil



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