Volatility Going Bananas
And I don’t think it’s done yet – which is why my VIX light is green today. Brace yourselves… volatility is barreling full-speed ahead.
This is a trader’s market – not an investor’s market. I wouldn’t even sell puts at this point, because I don’t think the sell-off is over.
So… what would I do?
When the market is this out-of-whack, the answer is simple – options.
Trade weekly and daily options in the S&P to make money up and down in this rollercoaster market. You can also play UVXY and the VIX for a direct volatility play as we oscillate.
In all honesty, you need to dig a little deeper to find the real opportunities in this market.
And that’s exactly what we’re doing with today’s Watchlist…
Oil Prices Just Tumbled 5%
How should we play this?
Well, check out my Watchlist to see how we should react to stocks’ reaction…
- Invesco QQQ Trust Series 1 (Nasdaq:QQQ)
There’s a big discrepancy between the major indices right now.
The Russell 2000 is down more than 3% in the past six months.
The Dow is up… but by less than 1%.
The tech-heavy QQQ, by comparison, is up 20%. And the S&P, which contains many of the same stocks as the Qs, is up over 10%.
If there’s further downside potential in this market, then it’s in the Qs. That’s the stay-at-home trade, whereas the Dow is the reopening trade. And after last week’s sell-off, I think the Qs could follow suit.
- PubMatic Inc. (Nasdaq:PUBM)
This digital ad company moves a lot. I mean, look at it this month alone:
Now, I think this one could be headed higher. But its vol is expensive, so to play it, you’ll want to use a spread to reduce your cost.
The January $45 calls are about $2.75. Against them, sell the $55 calls for $1.05, and you’re paying around $1.70 for an upside bet in PUBM.
- Energy Select Sector SPDR Fund (NYSEARCA:XLE)
Oil is getting death-starred today. After Moderna said it wasn’t sure about the vaccine’s efficacy against Omicron, Brent and WTI tumbled lower.
But we’ve seen the way oil can bounce back. And long-term, I still think prices could shoot higher.
XLE is down over 5% in the past month. And that’s our opportunity to get in low…
And get out high.
The Reopen Trade Is Still in Play
At least, that’s what this bullish Carnival Corp. (NYSE:CCL) trade is telling me:
CCL is one of my favorite names – especially after it handed my Profit Revolution readers the chance to make 115% in 17 days with an 84-cent trade.
Want the chance to make 100%-plus in 30 days or less with trades under $1? Click here to learn more about Profit Revolution.
This trader isn’t playing a long call or put like us though. They are selling near-dated premium in CCL with the December 3, 2021 $19 puts for about $1.26. Against that, they’re buying the $15 puts for 48 cents, creating a put diagonal.
We’re looking at a little bit of a yield play here, but it’s one that also gives the trader some long volatility exposure.
Essentially, this trade is looking for upside in CCL.
If this thing gets to $19 a share by December 3, they’ll collect the max amount of premium.
But can it get there?
Look – just a few weeks ago, on November 8, CCL was a $25 stock.
Today, it’s under $18 a share.
I think it’s time to start looking for some sort of counter play – counter to the stay-at-home trade, that is. And as a classic reopening stock, CCL is a great way to do that.
I shared exactly how I’m playing CCL during my live Profit Takeover show today.
Miss it? Well, I’m live again tomorrow at 12:30 PM ET – and it’s all happening right here on Money Morning LIVE.
Get this week’s schedule right here, and I’ll see you soon…
Founder, Profit Takeover
November 30 2021