Financial sector looks pretty good, showing relative strength, despite choppy market. Nice wedge breakout on heavy volume, with excellent mirror support level retest. We are looking for 71.30 level breakout. SL 67.80
KRE call credit spread - back logging entry, not at expiry yet
At likely channel high resistance
Driving in hard rally
The center line is well respected
Likely a -2 to +2 sigma move and then roll over
Danger is rally expansion after a consolidation so need short strike to be as high as possible
Aggressive sellers above in DBD supply zone
Short strike at 70 is at...
1. Steepening Yield Curve
2. High GDP Growth, which will boost loan growth
3. Lower credit losses supported by fiscal stimulus
4. Accelerating job growth, which should drive up consumer spending, improve credit outlooks further & enable accelerated reserve releases
5. Accelerating buy backs
*Fed to end its temporary restrictions on most banks paying dividends and...
... for a 1.08/contract credit.
Notes: I already have some January on, and there is no February currently, so going out to March with 30-day still >35% at 36.5% and expiry specific at 38.4%. As with my other IRA short put trades, I'm fine with getting assigned, selling call against, particularly since it has a small dividend to pay you while you wait to exit any...
... for an .81/contract credit.
Notes: With 30-day at 57.4% and expiry-specific at 42.3%, selling premium in one of the underlyings on my IRA shopping list. (Current yield 3.02%). I would ordinarily just ladder out, but this isn't exactly weak relative to where it's been, so want to keep powder dry for it in the event it weakens further. 2.07% ROC at max as a...
Are bond about to tank? KRE is threatening a range breakout just as bond pull into key support.
Could reverser quickly of course but something to watch.. Its been interesting to see bonds sell off as
the market sells off.
Regional banks have been an absolute dog as of late. They lag almost everything, other than energy. This sector has shown some strength since the “Tech Wreck”. So why do we focus on this group? Well it is part of a larger story…. interest rates. Let’s hop on the chart.
So here we have the charts of KRE. We have seen a downward sloping trendline that was intact...
... for a 1.49 credit.
Notes: With its current yield of 3.66%, looking to pick up some shares lower or just keep the premium. Background implied at 44.9% with an ROC of 2.50% at max as a function of notional risk, 9.71% annualized.