A few readers asked about the earlier trade I mentioned, and what it means to my longer term views, now that most major indices are negative YTD.
The short answer is not a whole lot. I still think we see even more
weakness into the second half. But we hit levels and saw enough
downside action that a bounce makes sense. Hence, the trading
The longer answer is a bit more nuanced: The SPY Puts were sold
strictly as a function of discipline. They had grown percentage-wise
beyond where I wanted in terms of downside exposure, given where the
market is and how quickly we got here. I still have a decent SPY Put
position, mostly Septembers; Same for the VIX Calls (August).
Buying the Qs was only a "toe in the water" type-modest trade. Since
its now almost in the money by a half point, I’ll move my stop loss to
breakeven. I’ll average up if we rally, and hold the position until it
Now I have some upside exposure if we bounce, and enough room that the
trade should be no worse than a breakeven (unless we gap down hard).
Tonite will be
lonely I’ll be able to finsih a sentence without Cody on Kudlow & Co. I’m sure today’s action will generate some interesting conversation.