Wednesday’s inflation report was nothing more than a fuse.
The marketplace has been a pool of gasoline, a powder keg out there, and this CPI report lit it.
So when I went on Schwab’s Big 3, I brought three bearish trades.
One is a retailer doing something the options market says it shouldn’t. Four weeks in a row, it has moved further than its options priced in. That’s a statistical anomaly, and I’m looking for a brief, violent pullback.
One is a stock that retail traders have been squeezing higher by piling into calls.
I’ll admit this trade is standing in the way of a freight train. But that freight train looks like it’s coming to a stop.
And one sits in every S&P 500 index fund, one of the biggest tech stocks in the world. This trade transcends the company. It’s a bet on what happens to the whole market when the rotation finally stops.
All three are put spreads, so I know my worst case before I’m in. On one of them, it’s 90 cents.
I’m all beared up with no place to go.
See all three trades, strikes and all, right here
To your success,
Don Kaufman
