Trade idea
Trade idea
Credit market optimism is a strong indicator of the equity bull case
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Entry / triggerCheck Mastercard and Visa for potential opportunities
SpeakerTony Batista
high confidenceVerify in video at 00:35 ↗
Episode
MAJOR TOM on Space Stocks, the VIX & Levered ETFs | 7.27 | One Lucky Dog LIVE!
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Trade idea
Trade idea Short put positions on SpaceX
Short put positions on SpaceX are considered as a trade idea with the belief that the stock will not reach 500.
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StrategyShort put positions on SpaceX
Entry / triggerStock price below IPO price
Target / exitStock price reaching 500
SpeakerUnknown
high confidenceVerify in video at 07:17 ↗
Trade idea
Trade idea volatility
the implied volatility of SpaceX will settle into around 60
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Strategyvolatility
Time horizonshort-term
Entry / triggershort volatility and short premium in SpaceX
Target / exit60
Invalidation / stopif volatility holds near 100%
SpeakerTom Stoff
Risks
- calls exploding on sharp rally
high confidenceVerify in video at 11:49 ↗
Trade idea
Trade idea rolling the untested side of a trade
roll the untested side of the trade to avoid using more capital and to not chase the trade
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Strategyrolling the untested side of a trade
Entry / triggerwhen a trade starts to go against us
Target / exitrecenter the trade
SpeakerTom
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Trade idea
Trade idea holding the position
If you're long a 1oz gold future, just hold on to it. If you're short, hold on to it as well. The directional trade should be held until your assumption changes.
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Strategyholding the position
Assetfuture
Entry / triggermarket needs to breathe
SpeakerUnknown
high confidenceVerify in video at 25:22 ↗
Trade idea
Trade idea cashless collar
A cashless collar is a strategy where you sell a call and buy a put for a net credit, providing limited downside risk and limited upside.
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Strategycashless collar
Entry / triggerIf you want to do a cashless collar, do it yourself.
Risks
- Limited upside potential
- Potential for limited profit
high confidenceVerify in video at 28:18 ↗
Trade idea
RKLB put selling
Rocket Labs is expected to decline, making the put sell strategy viable
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Strategyput selling
Assetstock
Time horizonshort-term
Entry / triggerwait for Rocket Labs to come back down a little bit
Target / exit20% return
Invalidation / stopstock price rising above 45
SpeakerTom
Structure / legs
- 45 put
Risks
- market volatility
- unexpected price movement
high confidenceVerify in video at 37:17 ↗
Trade idea
ROCKET LAB selling 45 puts for $2
The speaker believes the stock will rebound and the put will expire worthless.
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Strategyselling 45 puts for $2
Assetstock
Expirationnot specified
Time horizon50 days
Entry / triggerwaiting for the stock to come back down
Target / exit20% return on capital for 50 days
Invalidation / stopvolatility won't stay that high
Speakernot specified
Structure / legs
- 45 puts
Risks
- volatility may not remain high
- stock may not rebound as expected
high confidenceVerify in video at 37:40 ↗
Trade idea
Trade idea ratio spread
low risk, low reward trade
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Strategyratio spread
Assetstock
Time horizon50 days
Entry / triggerstock on its lows
Target / exit50 cents
Invalidation / stopstock needs to come back down
Speakerunknown
Risks
- stock price movement
high confidenceVerify in video at 42:13 ↗
Trade idea
Trade idea Selling premium on SPY or Q's
Selling premium on SPY or Q's is a good time due to volatility bid
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StrategySelling premium on SPY or Q's
Entry / triggerVolatility bid now
SpeakerTom
high confidenceVerify in video at 50:01 ↗
Trade idea
Trade idea
credit spreads might start winding out
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Entry / triggercredit spreads might start winding out
high confidenceVerify in video at 1:14:48 ↗
Insights
Insight
Ladder Strategies and Volatility
When volatility is high, it's better to move both positions to the same month for easier adjustment. When volatility is low, ladders are preferable as they synthetically increase volatility.
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Applicable when
- high volatility
- low volatility
high confidenceVerify in video at 19:08 ↗
Q&A
Q&A
What are you thinking about natural gas?
From the long side
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Actionable takeawayConsider long positions in natural gas
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Q&A
Is space a genuine new investable industry?
The speaker believes it is a genuine new industry but is still dependent on government contracts and a few companies.
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Actionable takeawayThe speaker suggests that the space industry is becoming more investable but is still in an early stage.
high confidenceVerify in video at 06:35 ↗
Q&A
What is the current implied volatility of SpaceX?
The implied volatility of SpaceX is currently at 100%, but the speaker believes it will settle into around 60.
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Actionable takeawayThe implied volatility of SpaceX is expected to decrease from 100% to around 60.
high confidenceVerify in video at 11:23 ↗
Q&A
When it comes to defending your position, let's say a strangle, Tom always says that we want to roll the untested side of the trade. This makes sense. Tom also says to not close out the tested side. Do we roll the tested side further out to balance out the original deltas?
Yes. When you roll from one month to the next, you open up your ideas. You could keep the same strike if you want to, especially if it's still out of the money, but maybe it's too close to the money. You want to move down a little bit. Let's just say you're getting tested to the downside. Your puts are a little bit closer. You can move your put down a little bit, get a little bit less delta to it, a little less credit. Also, when you roll month to month, you can open it up. You could do whatever you want. You could change the whole overall position.
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Actionable takeawayWhen rolling a strangle, consider adjusting the untested side to balance deltas while avoiding overexposure on the tested side.
high confidenceVerify in video at 15:09 ↗
Q&A
What's the notional size of the new single stock futures?
The notional size is 100 shares of stock for the standard version and 10 shares for the micro version.
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Actionable takeawayThe notional size is small, which is a positive aspect for risk management.
high confidenceVerify in video at 20:08 ↗
Q&A
Are you still holding the SpaceX 105 August 105 put position?
The speaker is long August 105 puts in SpaceX, but not in the account for lost dog. They are short 100s, 95s, 90s, and 80s puts.
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Actionable takeawayThe speaker is long August 105 puts in SpaceX, but not in the account for lost dog. They are short 100s, 95s, 90s, and 80s puts.
high confidenceVerify in video at 24:47 ↗
Q&A
What is a buffer fund or buffer ETF fund?
A buffer fund or buffer ETF fund is a strategy where you buy a stock or an index and then sell a call and buy a put for a net credit, providing limited downside risk and limited upside.
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Actionable takeawayThis strategy involves selling a call and buying a put to create a synthetic short position, which limits both downside and upside potential.
high confidenceVerify in video at 29:41 ↗
Q&A
What advice can you give for those who have not traded markets with massive continued draw downs or pullbacks?
Maintain position size in check, avoid selling puts into red markets, and sell puts when the market is grossly oversold. Avoid selling puts in overvalued stocks like SpaceX or Nvidia.
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Actionable takeawayKeep position sizes small and avoid selling puts in overvalued stocks during market downturns.
high confidenceVerify in video at 34:04 ↗
Q&A
You want to annualize that it's 140% return for this with with an 84% pop, right?
The speaker confirms the calculation and states that the return is 140% with an 84% pop.
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Actionable takeawayThe speaker is calculating the annualized return based on the pop and the time horizon.
high confidenceVerify in video at 37:57 ↗
Q&A
Have you seen the lows for the day in the S&P 500X?
The S&P 500X lows were seen earlier, and the market was up 20. The speaker thought the lows were seen five handles ago.
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Actionable takeawayMarket levels and volatility were discussed, with the speaker indicating that lows were seen earlier in the day.
high confidenceVerify in video at 43:30 ↗
Q&A
What's why is the NASDAQ up 400?
The NASDAQ was up 400, but the speaker is questioning the significance of this move, noting that it wasn't as big as it seemed.
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Actionable takeawayThe speaker is questioning the significance of the NASDAQ's 400-point rise, suggesting it may not be as impactful as it appears.
high confidenceVerify in video at 46:54 ↗
Q&A
How does the VIX reflect expected S&P 500 volatility?
The VIX reflects expected S&P 500 volatility over the next 30 days, and the futures curve shows traders' expectations for future volatility at different dates.
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Actionable takeawayThe VIX is a measure of expected volatility, and its futures curve indicates traders' expectations for future volatility at different time horizons.
high confidenceVerify in video at 52:33 ↗
Q&A
What is the significance of the VIX as a product for retail traders?
The VIX is considered the most misunderstood and misused product for retail traders. The speaker notes that the VIX futures roll up by almost a dollar each month due to the leverage involved, which is not widely discussed.
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Actionable takeawayThe VIX is a complex product with significant leverage that can lead to unexpected outcomes, making it challenging for retail traders to use effectively.
high confidenceVerify in video at 57:45 ↗
Q&A
Is US corporate credit spreads are near multi-year lows? Is credit market optimism the strongest validation of the equity bull case?
The speaker is skeptical about the credit market optimism being the strongest validation of the equity bull case, and mentions that it's a red flag for them.
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Actionable takeawayCredit market optimism may not be the strongest validation of the equity bull case.
medium confidenceVerify in video at 1:04:08 ↗
Q&A
Is the credit market optimism the strongest validation of the equity bull case?
The credit market optimism is not the strongest validation of the equity bull case. Tight credit spreads suggest companies can meet obligations, but this does not necessarily mean their stocks are attractively valued or that future earnings will justify current prices.
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Actionable takeawayCredit market optimism does not directly validate the equity bull case. Investors should not conflate credit market conditions with stock valuation or future earnings potential.
high confidenceVerify in video at 1:08:57 ↗
Q&A
Is this a validation of an equity bull case?
The speaker suggests that the current corporate spreads near multi-year lows and credit market optimism may indicate a potential equity bull case, but notes that equity investors are paying high multiples for continued growth, contrasting with Schiller's cyclically adjusted price to earnings near historic extremes.
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Actionable takeawayThe speaker highlights the contrast between credit market optimism and equity valuations, suggesting that while corporate spreads are low, equity investors are paying high multiples for growth, which may indicate a potential bull case but with risks of divergence in market conditions.
high confidenceVerify in video at 1:13:04 ↗
Q&A
Are the winds changing?
The speaker acknowledges that the winds may be changing, but expresses uncertainty about the direction and impact of this change.
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Actionable takeawayThe speaker suggests that traders should adjust their expectations and reduce position sizes due to the uncertainty in market conditions.
medium confidenceVerify in video at 1:15:02 ↗
Q&A
Is the TOS API good for automated trading? Does it compare favorably to Schwab or IBKR? What about versus Alpaca?
The speaker mentions they can speak to their experience with Tasty's API but cannot comment on Schwab, IBKR, or Alpaca. They note that Tasty's API is not listed among the competitors mentioned.
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Actionable takeawayThe speaker is unable to provide a direct comparison between TOS API and other platforms like Schwab, IBKR, or Alpaca, but emphasizes their own experience with Tasty's API.
medium confidenceVerify in video at 1:28:31 ↗
Q&A
Are any of the firms mentioned using assisted agents besides IBKR?
The speaker mentions that IBKR definitely uses assisted agents, but is unsure about other firms.
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Actionable takeawayIBKR uses assisted agents, but other firms' usage is uncertain.
medium confidenceVerify in video at 1:29:52 ↗