To The Moon

I thought PCE was just an appetizer, but it was the main course. Before the market opened, the U.S. core PCE for January blew past expectations with a 4.7 percent annualized rate, above expectations of 4.3 percent and up from 4.4 percent. Core PCE m/m was 0.6%, above expectations of 0.4% and 0.3%. Nasdaq futures fell 1.88% after the data.

The problem is that there are three other hawkish Fed officials speaking during the session today: Cleveland Fed President Loretta Mester, St. Louis Fed President James Bullard and Fed Governor Bob Waller. Ms. Mester was a proponent of a half-point rate hike, and the market pulled back Thursday after she spoke.

Even if the bad news takes a turn tonight, who knows if the three of them will say they support the next 50 basis point hike? But with yields this high, it's hard to see how the night will go again.

$ARK Innovation ETF(ARKK)$ Standard bear market put spread

• buy $ARKK 20230421 36.0 PUT$ $ARKK 20230421 36.0 PUT$ ​
• sell $ARKK 20230421 30.0 PUT$ $ARKK 20230421 30.0 PUT$ 

The total turnover of the strategy should be more than 4 million, because the sale put the royalty hedge. The due date is fairly close, April 21. The trader did not choose one leg and I expect him to hold for a while.

And then you look at ARKK at 30 when was it last year?

$VanEck Vectors Semiconductor ETF(SMH)$ Notice it's not a three-legged strategy, it's three one-legged strategies.

1. ​$SMH 20230616 280.0 CALL$ ​
2. ​$SMH 20230331 252.5 CALL$ ​
3. ​$SMH 20230421 230.0 PUT$ $SMH 20230421 230.0 PUT$ 

They are sell 280, sell 252.5, and buy230All three strategies are biased against the semiconductor index. Although the profit ceiling of 3 is much larger than 1 and 2, I would say 2>1>3 in terms of steady profit. Best sell call, worst single leg put.

Everyone can take what you want.

Have a great weekend!