Rocket Equities & Options Report

By Tommy O’Brien

Mar 23, 2023

It’s Fed day, and while the banking crisis looks to be somewhat contained, at least from the outside looking in (No one really knows yet whether it is actually contained), inflation is still present and will be front and center today when the chairman speaks at 2:30pm ET after the rate decision at 2pm.

We are going short this market. We are right back to the .618 retracement of the entire move lower in the ES Futures from the Feb 14th high.

We are buying an SPY put that expires Friday. Only risk what you are willing to lose as the market could easily pop one way or the other, but I see a decent risk vs. reward set up right now with the ES approaching the 4,053 level, even with the added volatility premium we are paying for defined risk puts right now with a Fed decision looming. Depending on the move and reaction, we may sell at any point after the Fed decision today. The volatility premium will decrease after the Fed Decision and press conference but won’t disappear completely as 2 full trading days remain until expiration at the end of Friday.

Buy The SPY March 24th $400 Put – trading at around $4.00. You are risking $400 per contract and the SPY would need to trade down to about $396 as of Friday’s close to break even, although we would likely sell ahead of that time if in the money, and we lose everything if it closes above $400 as of Friday, so keep your risk in check as this is a high-risk trade.

Positions:

Buy The SPY March 24th $400 Put – trading at around $4.00. You are risking $400 per contract and the SPY would need to trade down to about $396 as of Friday’s close to break even, although we would likely sell ahead of that time if in the money, and we lose everything if it closes above $400 as of Friday, so keep your risk in check as this is a high risk trade.

Stay tuned for updates!

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