Show the cards! Market trends prior to March 24:bearish!

After more than a month of sideways, bulls and bears are impatient, Powell is also impatient, even said to speed up the pace of rate hikes, so the March rate hike probability of 50 basis points into 70%. ​

Yesterday's article mentioned that there are two opinions in the market:

  1. Ultra-hawkish rate hike: 50 basis point rate hike probability in March
  2. Dovish: The Fed can live with 3% if inflation doesn't fall quickly to 2%.

Before yesterday, the market favored 2 more than 1.

At the start of the year, the consensus was for a longer rate rise, not a higher one. There is a consensus that inflation cannot fall quickly, but there is a sense that rate rises need to be gradual and Mr Powell is unlikely to reverse his plan for gradual quarter-point increases. If inflation cannot come down quickly, the Fed's acceptance of 3% can be expected.

The cold fact is that there is no theoretical basis for a 2 per cent inflation target. Presumably a data without any theoretical basis should be easy to replace.

But the market clearly underestimated Powell's determination to bring inflation down, after two consecutive months of better than expected data.

There is an obvious line of reasoning that Powell is not just drawing conclusions from the data that has been released over the past two months, but is considering an aggressive rate hike based on what he knows about the February non-farm and CPI numbers.

Then the next two weeks will not be too much of a surprise. Non-farm will definitely beat expectations on Friday and CPI will definitely beat expectations on Tuesday.

It's a surprise but there should be a lot of happy people. The bears must be happy to see the catalyst after a month of trading sideways; The bulls are also happy because this is not a good price to go long.

After two months of selling calls, do you feel like you can finally let go?

Sorry, the result is still a sell call. Compared to the last two months is the aggressive version: sell in-the-money call options: 

$Apple(AAPL)$ Option traded at 152, strike at 150. The direction of trade is to sell In-the-money call option

$Alphabet(GOOGL)$ Option traded at 93, the strike at 90. The direction of trade is to sell In-the-money call option

$Amazon.com(AMZN)$ Option traded at 93, the strike at 90.The direction of trade is to sell In-the-money call option

To be clear, selling a call option is not exactly the same as shorting. If Apple's options expire on March 24 and the stock is still at $152, it will obviously make money. But daring to call inside the offer suggests there is no bullish room ahead of the FOMC (March 23).

$Tesla Motors(TSLA)$ So did Tesla, though the sellers were careful not to pick in-the-money options:

There were also open puts, but in terms of turnover and time, the nature of the order is similar to the reporting trade:

For the rise in interest rate probability, straight call should be taken by aggressive long institutions, there are a lot. The examples in yesterday's article were conservative, such as Apple's sell put. There was an even more outrageous call the other day:

Including the NVDA bullish order mentioned earlier, I think the July AMD 100 target is not outrageous, but is it a little too early to buy the call?

​But it's worth noting that there were no big bearish orders on NVDA and AMD yesterday.

# Options Hub

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  • Ah_Meng
    ·2023-03-09
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    Interesting... quick question so I understand correctly, when you sell in the money call options, it is naked calls rather than covered calls in the above examples? What happens when the price of the primary stock drops below the call option price? Do you need to buy the primary stock at the call writing price during expiring date?
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    • wyin08
      k
      2023-03-09
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  • CYKuan
    ·2023-03-09
    TOP
    thanks for sharing
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  • T20211126001
    ·2023-03-09
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    Yes lets gogogogoot
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  • Gloria112
    ·2023-03-09
    TOP
    Yup, selling call for sure
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  • Missyuniversa
    ·2023-03-10
    TOP

    Great ariticle, would you like to share it?

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  • NeedMoneyPls
    ·2023-03-10
    this is called tax write off
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  • Missyuniversa
    ·2023-03-10

    Great ariticle, would you like to share it?

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  • ND80
    ·2023-03-09
    Kk
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  • Jadenssr
    ·2023-03-10

    Great ariticle, would you like to share it?

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  • SandyPoo
    ·2023-03-10

    Great ariticle, would you like to share it?

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  • stevencky11
    ·2023-03-10
    这篇文章不错,转发给大家看看
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  • 7PATRICK7
    ·2023-03-09
    Great ariticle, would you like to share it?
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  • BipBip888
    ·2023-03-20

    Great ariticle, would you like to share it?

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  • BipBip888
    ·2023-03-19

    Great ariticle, would you like to share it?

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  • ykhoo
    ·2023-03-19
    Great ariticle, would you like to share it?
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  • BipBip888
    ·2023-03-18

    Great ariticle, would you like to share it?

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  • Joedi
    ·2023-03-18

    Great ariticle, would you like to share it?

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  • Wealthliner
    ·2023-03-18
    这篇文章不错,转发给大家看看
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  • 凡落尘
    ·2023-03-17
    这篇文章不错,转发给大家看看
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  • Kei_XIII
    ·2023-03-17

    Great ariticle, would you like to share it?

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