Paul Varcoe82 days ago

US500

SHORT

OPTION TRADE DON'T DO IT UNLESS YOU UNDERSTAND OPTIONS

I have talked about GameStop a lot on my recent streams. In particular I recommend my Tuesday 3pm stream entitled "All about GameStop", and this morning's stream where I talk about the possible wider consequences of the affair. This is not going away any time soon, and could turn out to be the catalyst the stock market needs to retrace to more sensible levels. While this affects mainly the US market, there will be an effect felt everywhere as the dog wags its tail. As I said in this morning's stream, it doesn't really matter what the truth is about why some brokers stopped retail buying GME and some other names like NOK, AMC, BB etc. The PERCEPTION is what is important. Retail feels that the big boys have used their power to stop their money making, and to self-serve yet again. While I have much sympathy for this view it really doesn't matter what I think, aside from me having a great time watching the big boys lose so publicly. Retail will today declare a sort of Class War against Wall Street. It kind of did already, but yesterdays' events mean there will now be no prisoners. Rumours abound just like the far right QAnon stuff, and it will just feed the fire. Again, it doesn't matter what the truth is. Did Citadel renew their short position then tell Robinhood to stop retail buying to collapse the price? I don't know and it doesn't matter. Short story is: Every crash needs a catalyst and this may well be it. Stocks are known to be overvalued. What if retail starts buying index puts? Those who sell them have to hedge by selling SP500 futures........ This is an extreme example but you see what I mean. Plus... it could happen! GME was a layup trade because of many planets aligning into a perfect storm (mixed metaphors I know but I am enjoying this), but no one really knows how much power the retail investors have as a group. Everyone knows that no one is bigger then the market. Ask Norman Lamont. However is EVERYONE ACTING TOGETHER bigger than the market? Probably. Just the uncertainty surrounding the probability of a Justice Department investigation that will touch on the legality of short-selling will be enough. The class war will cause a lot of trouble here, and I don't want to be long stocks at all. Stocks hate uncertainty. This could well blow up. I am waiting for a rally to get them slightly more cheaply, but I am going to buy some March 2600 puts for around 100. I see the first TP as 3400 for half of them. I know this LOOKS like 1:1 RR but they will be worth more like 320 not 200 if we get there in a week or 2. At the money 3750 puts in SP500 for March are 140 ish if you have deep pockets, they will pay out better, but you can afford fewer of them. I would run the rest looking for 2400. WEALTH WARNING This is a bit of a hail-mary trade. I usually call things a week or two too early, so feel free to wait for better signals, but watch the market in GME today and see if it reaches a new high. I think it will. Then see how the market feels. pre-market GME is 340, closed at 193 You may be better placed just to be short the spot with a SL above the recent high, if you think that it grinds down with no quick move. Some background stuff: Robinhood CEO claims he had no choice: https://twitter.com/ChrisCuomo/status/1354994000294522881 Where it's all going on: A https://old.reddit.com/r/wallstreetbets/ A sensible take on what likely happened at RH yetsreday: https://old.reddit.com/r/wallstreetbets/comments/l7fw0x/i_used_to_work_merrill_heres_what_likely_happened/ AOC supports an investigation: https://old.reddit.com/r/wallstreetbets/comments/l7225e/aoc_calling_out_robinhood/

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