Skip to main content

Posts

Showing posts from June, 2016

When the Levee Breaks

Markets finished off a wild week today with the S&P losing -0.92% on the rising possibility of Great Britain leaving the European Union; more commonly referred to as the 'Brexit.'  The move comes just one week after the U.S. printed a payroll report that was disappointing to politicians and economists, but welcomed by the market as it gives cause for the Fed to kick the monetary policy can even further down the road.  Market chatter is now suggesting the next Fed move may likely not come until December... a full year after the last rate hike.  Britain's shenanigans will only serve to complicate matters further; but for now, the U.S. dollar has been subject to some dramatic whipsaw volatility as a result. Today's price action served as a stark reminder that global macroeconomic risks still pose a threat to domestic markets as they attempts to breakout to new all-time highs. GIMME SHELTER Here's the USD chart: Last Friday's move shocked the greenback out of it

Short USO September Calls

Based on the moves in the dollar over the past month and the fact that there is still global glut of supply, I've developed a bearish view on oil at its current levels. Earlier, I posted a call ratio backspread on the SCO (a levered inverse oil ETF) approach to capturing a downside move, but oil is still in a technical bullish trend pattern and has plenty of support to break through before it forms a bearish breakdown pattern.  While that trade would not have lost much, it's looking less likely that it will develop the momentum necessary to be a winner. Therefore, I now suggest capturing some call premium by entering into a vertical bear call spread on the September USO call options.  Here's the trade: Short: September USO $12 Calls at $0.84 Long: September USO $16 Calls at $0.11