To The Moon

Institutions short $Consumer Discretionary Select Sector SPDR Fund(XLY)$ again:

• buy$XLY 20230915 145.0 PUT$

• sell $XLY 20230915 95.0 PUT$

Institutions bought 4,000 puts with a strike price of 145 and sold 20,000 puts at 95.

Yesterday's article wrote that a basket of stocks bought by XLY may be the source of the decline. As the chart shows, the top 10 holdings are as follows:

Both Amazon and Tesla could be the trigger for a pullback, but I didn't expect an answer so soon: Yes, Tesla is leading the way again! How far will the correction go? There was a lot of buying at the open today on the 149 strike put, due May 5th:

$TSLA 20230505 149.0 PUT$

There were also people buying bearish strategies yesterday, compared to the above one-legged put, the strike price is lower:

• buy$TSLA 20231020 145.0 PUT$

• sell$TSLA 20231020 105.0 PUT$

Expect this pullback to be below 145 and above 120.

So tech stocks without the concept of AI will suffer in 2023. When institutions weigh which stocks to sell in a falling market, they are likely to be less willing to sell AI stocks such as Microsoft and Google, and ultimately look at Tesla. In the past, Musk has called for companies to put AI development on hold for six months to wait for him. Perhaps Tesla's stock price will not be relatively weak after it has even gimmicky AI applications.

In other stocks, Microsoft's earnings came as no surprise:Maximizing Profits: How Institutions Trade Microsoft Earnings with Options. I think with Microsoft, either holding the stock or selling put is a good trade. The biggest problem with buying options is the time loss. Whether it is a call or a put, hedges need to be fully considered when buying options.

KWEB options have seen a less common trade: a second roll. Yesterday I wrote about a trader who bought put, bought put at 28.5 on the 19th, closed out on April 24th, roll 27.5. More rarely, he closed his position yesterday at 26.5, opting to continue to roll 26.5put.

$KWEB 20230428 26.5 PUT$

It is rare for an option to roll twice in a row. I think the price is very close to the bottom, but bottom hunting will have to wait.