Inflation Remains Sticky: What It Means for Options – 04/18/2024

Macro Views

Tony Zhang
Jessica Inskip
Chief Strategist and Cofounder
Director of Education and Product
OptionsPlay®
OptionsPlay®

The market has seen a bearish shift since last week’s CPI print and the escalation
of war in Israel. However, I still see this weakness as an opportunity for buyers to
step in at a more attractive risk/reward ratio at the moment, rather than the start
of a larger leg lower. With a resilient US economy, I expect volatility to stabilize in
the following weeks and for buyers to largely retain control.
I’m more bearish than usual. While downturns are normal in an up year, a spike
in the US dollar does not bode well for tech, which has carried this year’s rally.
The S&P 500 also looks like it will close below the 13-week moving average. If we
close this way, I am bearish until a bullish flag arises—which could potentially
happen when major tech earnings are announced next week.

For more information, please watch the replay video.

Inflation Remains Sticky: What It Means for Options – 04/18/2024

Trade Ideas
Tony Zhang Jessica
TonyInskip
Zhang
Chief Strategist and Cofounder Director
Chiefof Education
Strategist and
and Product
Cofounder
OptionsPlay® OptionsPlay®
OptionsPlay®

It’s time for investors to start paying attention to Nike (NKE) again as it trades
near multiyear lows. NKE currently trades at 24x forward earnings, which is a
20% discount to its historical average and well below the 30x-40x it traded for
the previous few years. With growth expectations starting to recover on the back
of China growth and the Olympics this year, NKE is looking at a second half
recovery. Options are expensive, so I’m going to buy an in-the-money call to
reduce the time decay of the options that I buy.
This week, I’m looking at power supplier Eaton Corp. (ETN) because of the
rising power demand of AI and the transition to clean energy. Demand is
growing at an astronomical rate, creating an opportunity in companies like
ETN that can bring faster options to market. I don’t want to take a largely
speculative stance due to my macro view, but I do think that any major
market downturn will be a buying opportunity. I’m selling a short put to
add the stock to my longer-term portfolio.

NKE LONG CALL ETN SHORT PUT

For more information, please watch the replay video.
 Inflation Remains Sticky: What It Means for Options – 04/18/2024

Tony’s Lookback

Last week, we opened a BlackRock (BLK) April 19, 780/750 put vertical at $9.45 for earnings. This is now trading
at about $21.80, signaling a good time to close the trade, take profit, and move on to the next opportunity.

Tony Zhang
BLK
04.11.2024
$
783.23 BLK
04.18.2024
$
756.39
Chief Strategist and Cofounder
OptionsPlay®

For more information, please watch the replay video.

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