The Media’s Omicron Narrative Is False

These Stocks Just Exposed the Media’s Lie

The recent sell-offs narrative – the one that the media has been telling since Black Friday – is that the market is selling off because of Omicron.

But don’t look at the broader market. Look deeper – at the actual stocks within it.

Because while some stocks were selling off, the ones you’d expect to – airlines, cruise ships, travel stocks – weren’t.

And those are the names dominating today’s Watchlist.

The market is actually up today, which is just further confirmation of my theory that Omicron isn’t the major threat to the markets that the media said it was.

1. Carnival Corp. (NYSE:CCL)

CCL is up 14% over the past five trading days – and I think this name has got even further to go from here:

CCL Dec 2021

So, how do you go bullish? Well, I’d take a look at long calls on CCL.

2. Southwest Airlines Co. (NYSE:LUV)

Just like the cruise lines, airlines have seen some bullishness over the past week. LUV is up almost 5% on the day as I type!

A month ago, this was a $53 stock. Two weeks ago, it was $47! There’s some serious turnaround potential here, and I’m looking at the January $40 calls for $1.60.

We get a one, two, three-day swing? These calls will go to $3 just like that.

3. Walgreens Boots Alliance Inc. (Nasdaq:WBA)

I know, I know – it’s not a travel stock. But I think WBA could see some real upside in 2022 as the mega-caps lose their luster.

If Walgreens Boots Alliance manages to lose the “boots,” and succeed as simply Walgreens, we could see a lot of interesting upside in the drugstore name.

Trading Tomorrow Morning’s VIX Expiration

Volatility is getting smoked today.

The VIX was above 25 on Monday – today, it’s in the 21s.

Money is flowing in and out of the VIX at rates I’ve never seen before. And I have to say, despite the fact that it spiked into the 30s recently, I don’t think I can confidently say that volatility has actually been going up.

It’s just expanding and contracting… expanding and contracting. And with the rally we’re seeing today, who knows what the VIX could do – we could see a major drop from here, and actually get the Santa Claus rally everyone’s been hoping for.

There’s just one other thing to consider…

Vix expiration.

VIX December futures expire tomorrow morning. And there is massive downside open interest in those December VIX puts.

If the VIX continues to drop into expiration tomorrow, then VIX futures could start running into these puts with huge open interest.

Traders are long these puts – but market makers are short them. And if the VIX dips to 20, 19, or 18, the market makers will have to short those futures.

And as a result, we could see the VIX cascade even lower, dropping at speeds we haven’t seen before.

Now, I’m not saying that’s a definite – my VIX light is yellow, after all, meaning we could see wild moves in either direction.

But it’s a possibility… and it’s one I’m keeping a close eye on tomorrow, especially if the market continues to get ahead of steam today.

CGC’s Line in the Sand

It’s been a few days since I’ve seen any big money trades worth mentioning…

But this weed play was too big to ignore:

Canopy Growth Corp. (Nasdaq:CGC) just saw a massive put sweep, a customer selling thousands of the January $7.50 puts for 22 cents.

Altogether, this big money trader is getting ready to pocket $726,000.

But that will only happen if CGC stays above the massive line in the sand that this trader just drew.

You don’t sell puts when you think a stock is going up. You sell them when you think it’s not going down. And this big money customer says that CGC is not going to drop below $7.50 by January.

If they’re right, they’ll pocket over $700,000 in premium. If they’re wrong, they could be forced to buy a lot of CGC stock.

Now, I’d want to go a little further out if it was me. You can get a lot more premium in July than you can in January. The July $5 puts, in fact, are 50 cents – more than double what you’d get for the January $7.50s.

That said, as you go further back, you run into other risks like earnings. But I’d rather collect here than where this big money trader sits.

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