Disclaimer
This is for informational purposes only.
Discussion
I will have more detailed thoughts on the current market set-up here soon, but just to kick off this Trading Journal channel here as we head into the trading day, I am currently long SPY November $450 calls, initiated Friday concurrent with the Market Journal update below. This decline has been very weak from the standpoint of fixed strike vol and defensive sector relative strength, and I believe the set-up is in place for a soft Core CPI print Wednesday to kick off the next leg of the squeeze.
Cem Karsan outlined the opportunity well in the interview discussed below, and while it is critical to silo his analysis within my own process, part of my evolution here over the last few weeks is to “be water” as Karsan likes to advise. Rather than just defensively take his analysis on board, I want to be more offensive as I navigate this blow off top, hence my position in longer dated calls.
Now, this could change at any time. If HY CDX spikes and sticks, defensive sectors catch a relative bid, and VIX/VVIX are green with VVIX leading, then I would at minimum need to exit the calls and consider reestablishing my core position in SPY October $400 puts (my primary vehicle for extracting the 10-20x return I believe is available into October).
