hungry_hippo

GM Powell Speech Bet

Short
NYSE:GM   GENERAL MOTORS CO
141 views
4
Two Fed members have already signaled a reluctance to cut rates in Sept, but the market decided to melt back up today regardless. The Big Kahuna, Powell, talks tomorrow in Jackson Hole at 10am EST. Appears there are some that are expecting him to pump the market again because he did the last 3 speeches. Based on Fed meeting minutes and the other members , I don't see him pumping tomorrow.

The plan is to buy puts now (half in case it continues the melt up), add tomorrow on open before the speech. Weekly GM options are cheap and have good liquidity. Note that this is basically an all or nothing bet, if the market goes up, you lose it all.

Auto manufacturers are very rate sensitive, another option would be XLF (financial ETF ). When betting for or against the Fed, find rate sensitive stocks or ETFs that have good liquidity and low premiums.

Note: GM has a bear flag going

Comment: There's the melt up, expect a gap up tomorrow morning and the market to tank on Powell's speech. More whipaw….
Comment: Well that was kinda funny. Computerz hit that sell button hard 5 minutes from close, have no idea which way the market gaps tomorrow, but still think Powell tanks it at 10am. Direction will be obvious by 11.
Comment: Read a few articles this afternoon, apparently there are still a lot of people who think Powell will signal a rate cut tomorrow. Obviously this trade is shot if he does, but I'm still expecting that he will not signal a rate cut based on the other Fed comments and the meeting minutes.

Just letting you guys know that this isn't a sure thing, plus I'm keeping the play small (hence the weekly puts for all or nothing).
Trade closed manually: Has a chance to go down a full dollar today, but taking the easy money and leaving. This should have netted you a good return, now you now how to play interest rate bets. Find something with low options premiums and good options liquidity.

By all means let me know if you come up with other similar stocks. I like UAA but it's really not directly tied to interest rates.
Comment: Well congrats if you had the patience to see it through all the way, I swapped over to TSLA puts. If you're still bearish on GM, now would be a good time to swap over to next week's puts.

Done posting on GM for now. This was a fun trade.
Comment: So this was the only trade I posted, along with buying more UAA puts earlier this week. Better to look for opportunities than to chase a whipsaw market. Made a couple of grand, calling it a week.

Kinda wish I threw a little more money at it, didn't double up this morning because it had gapped down. Imagine if you had loaded the boat and bought 100 contracts of $37.5 puts at $.29 yesterday... oh well. (I had 15, was gonna add to 30 if the market gapped up).

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