Specifics on the new short trade and a new pair trade idea too
Well, unless we bounce from near these levels, we can forget about my whole 5% rangebound market. On the other hand, how about those metals? Remember when I’d written:
Q. Cody, a short time ago, you hinted at a possible SLV straddle. What are your thoughts? Thanks Cody!
A. I still think that buying volatility and/or buying both calls and puts on SLV is probably a great trade here. If you really wanted to get complicated/Meta, I’d suggest buying volatility on commodities and hedging that by shorting volatility on stocks. That is, I think metals will be much more volatile relative to stocks in coming weeks.
Since then the SLV has dropped nearly 15%. Speaking of which, gives me a new pair trade idea that I thought I’d pass along though I’m not going to act on it myself as I coast into year-end — you could look at buying some SLV and shorting some GLD. I think both might have more downside ahead, but gold’s likely to show more near-term downside on those down days and less upside on up days. Time frame for this trading idea: One month to six weeks.
One trade I am making today is buying some APOL puts. I’m looking at puts dated six to nine months out and with strike prices at about 10-15% out-of-the-money. Just a first tranche buy. You guys know the drill — I’ll start the position now and add to it over coming days and weeks.
