The bottom coming soon
I see two paths to market action this week:
- Monday and Tuesday fell sharply. Rebound after rate hike path announced on Wednesday
- Stop the fall tonight, rebound tomorrow. Wednesday was up and then down.
I think Wednesday will bounce anyway for two reasons:
1. The market plunged ahead of schedule in anticipation of more stringent monetary tightening. So if Wednesday's rate decision does not exceed expectations, the market will bottom out and rally.
2、$Cboe Volatility Index(VIX)$ is the market's best feedback on fear. When the VIX hits 36, the market rebounds. Today's premarket VIX is up to 33. It can be found from previous observation that the faster VIX rises, the faster it falls back, especially if it exceeds 30 in one day, it can quickly bottom out.
After the data came out, I reflected on two things: I didn't judge the CPI ahead of time; I didn't trade VIX ahead of time.
May CPI data is not surprising and it is easy to conclude from the strength of crude oil, gasoline and gas that May inflation will not be pretty. A similar cause and effect can be seen from $Target(TGT)$'s announcement of inventory clearance and shipping weakness.$ZIM Integrated Shipping Services Ltd.(ZIM)$
The VIX dawdled to lows just before the CPI data was released. It just means my macro logical association needs work.
Sell put:
I'm just going to do a regular sell put today. Consider other trading strategies on Tuesday and Wednesday.
| Ticker symbol | Annualized income | Expiration date | strike price | Premium |
| $ATVI 20220715 75.0 PUT$ | 18% | 2022/7/15 | 75 | 1.2 |
| $VMW 20220715 125.0 PUT$ | 27% | 2022/7/15 | 125 | 3 |
| $SIMO 20220715 85.0 PUT$ | 19% | 2022/7/15 | 85 | 1.5 |
The sell put traded last week may take over, then do the cover call strategy.
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Bottom coming soon ?
Fingers crossed!