Happy FOMC day
Good Morning Traders
Today is FOMC day, at 2pm and 230pm we should see some volatility start to spike up.
It looks like the estimate is to raise rates 25 Bps to 5.50%. While I think this is the most likely scenario, I would not rule out the possibility of another month of stagnation on rates. IF they come out and do not raise, but hold it constant I think the market takes this very positively. Lower rates are good for stocks, and which many of the already released earnings guiding lower for next year, this could be some fuel to the recent grind higher.
If however the opposite happens (which I don’t think is very likely) then we could see a huge uptick in VOL as many people attempt to make their way to the doors. Each successive move higher in rates is not linear, its compounding. With each hike higher more and more people will pull money from the Spoos and set it some place safer.
Looking that the SPY we are still way above the POC for the last 3 months, which is down at 411ish. Looking at this volume structure, if we fall, we could fall fast. I don’t have much overhead in terms of immediate resistance, so time will tell on a continued Grind higher.
That said we have some pretty serious event risk today with the FED, so be wary to open up new positions until we pass that risk. I think a solid trade or two will present itself this afternoon as it usually does on FOMC days.
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Finally we have open positions.
A few of the more notable open positions I have are RTX 0.00%↑ options which are up over 150% before we open this morning. They are the August strike and I am still pretty confident in the Gap fill. I have trimmed a few at 50% and a few more at 100% to pay for the trade so now I am just going to ride this out until I feel like taking the trade off.
In addition I am still holding a little over a lot of ENVX 0.00%↑ . I keep adding to the pile slowly on pullbacks. My current cost basis in in the lower 13s range, but that’s after this weeks additional shares. Ending last week we were in the high 12’s. End goal there is to accumulate 300-500 shares and tuck them away for 18-24 months (maybe longer). I can see that hitting the 3 figure mark pretty easily if their current production ramp up and contract acquisition continues.
Finally there is some TSLY 0.00%↑, this is a BS hold for me. Its a high yielding covered call strategy on TSLA 0.00%↑ shares. I threw a few hundred bucks at it and am going to let it slowly drip build the position. I don’t really care what happens to price immediately, but at $.80-$1.00/month in dividends I can see that becoming a small stream of potential income. Again these are gamble shares for me. If they go to zero I am okay with that.
We have a few other open options, but those are just small fun positions for us.
As always none of this is financial advice, these are all just personal opinions and positions.