The hunt for premium selling opportunities continues. And today's trade is in a name that is heavily weighted in the Home Construction sector ETF, where options premiums -- sector-wide -- are a bit more elevated than the rest.
Thankfully, October options expiration happens the week before this company releases its next quarterly earnings report, so we don't have any of that event risk to worry about.
While in the process of preparing for this week’s live Options Jam Session, I came across an open trade in $HMC that has been performing quite well for us.
It reminded me that when I wrote about the trade back on May 15th for subscribers, I began the piece with this:
I’m filing today’s trade under the category of “Hard Trades.” Not because it’s particularly hard to execute or because it’s a complicated multi-legged spread. It won’t require an excessive amount of margin to get positioned nor is there any risk of unlimited losses.
It’s hard because people might look at the trading action of the past few days and think that it’s “gone too far” and “I should wait for a pullback.”
And traders who think that way may be right.
But here’s the thing: sometimes the best trades to get into are the best precisely because they are the “hardest” to pull the trigger on. And that’s where our opportunity is. Those of us who fight through the conventional wisdom of average traders and get positioned ahead of the crowd will be lifted later on by those same traders...
From the Desk of Steve Strazza @sstrazza and Alfonso Depablos @Alfcharts
We held our September Monthly Strategy Session Tuesday night. Premium Members can access and rewatch it here.
Non-members can get a quick recap of the call simply by reading this post each month.
By focusing on long-term, monthly charts, the idea is to take a step back and put things into the context of their structural trends. This is easily one of our most valuable exercises as it forces us to put aside the day-to-day noise and simply examine markets from a “big-picture” point of view.
With that as our backdrop, let’s dive right in and discuss three of the most important charts and/or themes from this month’s call.
Now, Chinese government bonds are pressing toward fresh lows.
Sovereign debt epitomizes downside risk. And Chinese bonds are on the cusp of a significant breakdown – a breakdown that spells more trouble for global bond investors.
Check out the VanEck China Bond ETF $CBON:
CBON aims to track the ChinaBond China High Quality Index (debt mainly issued by the People’s Bank of China). And like US treasuries, Chinese government bonds are flirting with fresh multi-year lows.
I have been adamant regarding a bearish bias toward US bonds. (In fact, I think they’re an excellent short.)
A similar outlook extends to Chinese government-issued debt if and when...