Hi Everyone,
I’d like to give you a quick update on the markets, TradingMarkets, and new research I’ve been working on with the assistance of Cesar Alvarez along with David and Matt.
I’ll also share the details on a webinar (no cost) I’ll be holding in a few weeks to go further on the items below. I’m seeing more trading opportunities today than I’ve seen in my 42 year career in the industry.
The opportunities today are coming from the perfect storm.
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It’s a combination of rising inflation, rising interest rates (which once they reverse will provide incredible trading and investment opportunities), along with millions of unsophisticated traders (actually they’re closer to being gamblers) who have little to no experience or knowledge on how to properly trade. They also have little to no understanding of risk management, trade construction, market correlations, and especially options trading.
Due to social media, this group is large and is creating wealth for sophisticated professionals on the other sides of their trades.
Add this with an onslaught of information that’s just outright incorrect coming from people who are more social media marketers than knowledgeable traders, and you have what I consider to be a once-in-a-decade opportunity to profit from.
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On Monday, April 24, the CBOE launched a 1-Day Vix Index in order to give a more accurate daily reading of the VIX.
It’s in response to the massive demand for the daily expiration day options, which is now up to 40% of the daily volume on the CBOE. Please see my PS below regarding the 1-day VIX.
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The exchanges and the investment firms are launching new products at a record pace. Some of the products are great. They provide us with trade construction opportunities that increase the risk/reward ratio in our favor.
Others are the opposite. They have structural inefficiencies (just like VXX has had since 2009) and they are providing trading opportunities for smarter traders who understand the inefficiencies and can construct positions that have extremely favorable risk/reward characteristics to take advantage of.
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AI (especially ChatGPt), is creating a once in a lifetime opportunity both on the long side and the short side.
Everyone, including myself, is looking at how to best trade this revolutionary technology. Interestingly some of the best opportunities are on the short side (especially with options which pre-determine risk).
For example, just look at Chegg (CHGG) on May 2.
A multibillion dollar company’s valuation got halved (down nearly 50% for the day) because in their earnings announcement they stated ChatGPT had impacted their business model.
The next few days were followed by double-digit declines in other companies that will be impacted by AI. Fiverr (FVRR), Upwork (UPWK) and a number of other companies saw heavy selling coming into their stocks in reaction to the news.
Because it’s still so early in the game, there was time to get short (put on puts) and see triple-digit short-term gains in the options in under 48 hours.
This is the identical behavior that I saw when the internet emerged in the late 90’s (TradingMarkets was launched in 1998 so we experienced it for years).
History is repeating itself again, and knowing which industries and companies to be long and short will create trading and investment opportunities for you for years to come.
Upcoming Webinar
I’m going to be holding a webinar (no cost) in a few weeks to cover much of this, share some updated research, point out the opportunities I see, and answer any questions you may have. I’ll do my best to take my 42 years of industry and trading knowledge so you can see what I’m seeing and trading today.
The webinar will run an hour, but as I’ve always done in the past, I’ll stay on and answer your questions for as long as you like. Some of the best knowledge at these webinars come from your and others' questions so please feel free to ask anything regarding today’s markets and trading strategies.
The date of the webinar is Tuesday, May 23 at 2 pm ET. If you would like to reserve your spot for the webinar, please go here and fill in your email address. I’ll make sure you receive an invitation (the webinar will also be recorded – it will be sent out a few days after the live meeting).
You can also sign up for the free webinar by adding your email in the form below…
Please note that Zoom only allows for 500 people to attend live. Admission will be based on the first 500 traders to sign up. The webinar will also be recorded – it will be sent out to you a few days after the live meeting.
Thank you and I look forward to being with you in a few weeks!
Sincerely,
Larry
PS – As you may know, I was one of the first traders to publish research on the VIX in 1995 (the same is true for VXX when it was launched in 2009).
Please be very careful on what you read on the new 1-Day Vix.
Much of the information coming from major media outlets and financial markets social media influencers is outright wrong.
I don’t believe anyone is doing this maliciously. It’s just a lack of knowledge, experience, and sophistication (plus a lot of them reading each other and writing the same thing) that makes it both dangerous and opportunistic at the same time.
I’ll cover this further with you and point out what’s correct, what’s incorrect, and the ways to use this new exciting index when we’re together in a few weeks.
Knowledge is Power and you’ll gain this knowledge at the webinar.
Please sign up here to reserve your spot at the live webinar.
PPS – Please reply “got it” if you received this email. It will assure you remain on our list and receive further updates
Thank You!