The market got quite a shock from the hot CPI this morning, as the ES is currently down 75 points or almost -1.5%. The NQ is currently off 296 points or -1.6% and the Dow is in the red by 555 or -1.4%. 

The 10-year yield is up to 4.28%. The DXY hit a low of 100.617 on 12/28/23, and is now pushing almost 105 this morning. 

Eventually it will be time for the Fed to cut, but this data is not pointing to now as that time. The market has gotten ahead of itself again when it comes to rate cuts.

One particular aspect of today's report that was hot was housing up 0.6% on a M/M basis. Housing is a much larger component of CPI than PCE. We get 3 more readings of the PCE, the Fed's preferred inflation gauge, prior to the May meeting, so the data will decide where we go, but this report was hot on many fronts. 

We had a nice execution in Disney last week for our equity position, and the options trade worked out well.

We have trades for DASH, and AMAT - both out with their number on Thursday after the bell. We are placing bearish options trades on both of them, by selling some premium.

DASH has about a 10% moved priced in for volatility in either direction with an implied move by Friday's expiration of $11.83. DASH is trading at $117.38.

AMAT has about a 6% move priced in for volatility in either direction with an implied move by Friday's expiration of $10.67. AMAT is trading at $181.72.

We are selling a credit call spread above the market in both equities.

We are selling a call above the market, and then to cap our losses we will buy back a call at a higher price. This will result in a credit that we will take in. 

Both of these options are high risk and could result in a 100% loss so don't over do it on position sizes here and be willing to lose anything you put at risk in this options trades around earnings.

 

DASH

SELL $122 Feb 16th DASH CALL

BUY  $127 Feb 16th DASH CALL

This results in a credit of about $1.50 or $150 per contract, which is our max profit. Our max loss is the $500 we risk, minus the $150 we took in, so $350.

 

 

AMAT

SELL $187.50 FEB 16TH AMAT CALL

BUY $190 FEB 16TH AMAT CALL

This results in a credit of about $0.60 or $60 per contract pair. Our max profit is the $60 we take in, and our max loss is te $250 we risk minus the $60 we take in, so $190.  

 

 

 

 

 

 

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