February 1, 2023

 

Tuesday morning
January 31, 2023

Good morning/afternoon,

It’s the day before the Fed meeting. What does John think will happen?

A 0.25% rate move.

But the press conference after the numbers hit will be the real mover of markets. The Fed will probably indicate in its special way that more hikes are on the way and will be for quite some time. In other words, the rate hikes will stretch out longer than most were expecting.

How will the market react?

A big gulp during/after the Fed commentary and then maybe take the lift down instead of the stairs.

To prepare for that scenario, John has doubled up on his Tesla short position.

He has just sent out this trade this morning:

TSLA February 2023 $210-$220 in the money vertical bear put spread at $9.10 or best.

Weighting: 10%

No of Contracts: 12

Here are the specific trades you need to execute this position:

Buy 12 February 2023 (TSLA) $220 puts at……..........….…$48.00
Sell short 12 February 2023 (TSLA) $210 puts at….......….$38.90
Net cost:………………………….……….…........................…………$9.10

Potential Profit: $10.00 - $9.10 = $0.90
(12 X 100 X $1.10) = $1,080, or 9.89% in 13 trading days.

John also sent out a bear put spread on TSLA on Monday. A February 2023 $220-$230 in the money bear put spread. So, if you already have this trade and you add the most recent then you have a bear put spread twice the size.

Of course, please only use a suitable number of contracts relative to your capital base in your brokerage account.

Worth a read:
The San Francisco Fallacy: The Ten Fallacies that make Founders Fail by Jonathon Siegal.

Many books on entrepreneurship talk about what to look for and what to look out for. But they don’t focus on failures and how those failures can ultimately lead to success. This is a great book, story well told – a real page turner. The San Francisco Fallacy refers to the herd mentality in thinking that the enormously expensive Silicon Valley area is necessarily the place to go for tech start-ups.

So, while we’re waiting for the Fed announcement, grab a tea and a book and put your limit orders in. Or go for a walk/bike ride and listen to a book on Audible. Can you digest stock market knowledge while negotiating windy roads and hills?

Enjoy the day.

Cheers,

Jacque

"I may be drunk, Miss, but in the morning, I will be sober, and you will still be ugly." - Winston Churchill