When the general public sees the numbers like Dow Down 600 points they tend to get wide eye’d.
Heck I have been in the business for 20 years now and when I wake up and see the S&P 500 futures down 30 I can even get a little wide eye’d.
That is where the similarities between the public and experienced traders ends.
The average joe investor seeing the sell off is scared. They might ask themselves
“What about my investments?”
“What about the economy?”
And finally they might ask “what about my job”
Heck some people with ’experience’ might be thinking the same thing.
These are the people that hear the word ‘option’ and think about using the Leverage
Me, I see something totally different. I am never cheering a sell off. However, I am rarely rooting against it either.
See, option traders and money managers that use options really like volatility. It is how we are able to prove our use case.
Thus, when I see sell offs start to happen I use it as an opportunity to start building a hedge, or if I am already hedged, as an opportunity to capitalize on profit.
The key to being a trader is not to be married to an outlook. It’s to go with the flow and ‘ride the volatility’ wave as it happens.
Leading into the market two weeks ago, I saw a market that was calm and going up and heading into earnings….
WITH RISK out there from the MAGA stocks (Microsoft APPLE GOOGLE and AMAZON).
However, I was riding the upward outlook because it does not pay to fight it (that said, we did manage to make money shorting AAPL in my Sharp B.E.T.S. system).
When the market turned around I wasn’t crying ‘oh no what do I do now” I was buying a hedge.
As things got progressively worse on Friday 1-31-2020, I was buying more and more volatility to ride the wave higher.
If things keep going, I will be buying MORE. Like a surfer: I want to ride the wave of the VIX to 20, 25, or even 30.
If we do not get the big wave up, guess what I have NO problem going back to long. Why?
Because I am married to trying to make money, not to an investment.
So, If you see a market sell off and your response is what do I do???
You need to file for divorce, your marriage to the stock market only going up needs to end.
As a trade idea we like long SPY long VIX as a pair.
Your Only Option
Mark Sebastian
PS: stay tuned, if you like volatility you will love our next announcement
PPS: congrats KC Chief Fans
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