Will Mr. Trump’s Gamble Payoff?
On Tuesday, May 8, 2018 the President of the United States delivered a message to the Islamic world when he unilaterally withdrew the U.S. from the Iranian Nuclear accord claiming that it was a “Horrible mistake and one of most one-sided disasters that the United States had ever entered.” He said that the deal that the Western Powers, Russia and China was actually helping Iran to build a nuclear device. The Western Powers, Russia and China all condemned the withdrawal as a threat to world peace.
Mr. Trump immediately reimposed sanctions on Tehran and banned any U.S. Corporation and financial institutions from doing business with the regime after a period of 90-180 days. Both Saudi Araba and Israel hailed the decision as a path to world peace and the end of Iran’s complete domination of the Middle East. The biggest question remains. Will the path to world peace be aided or destroyed by this gambit?
During the first year of his administration Mr. Trump listened to a set of advisors that were very cautious about how he dealt with world affairs. Many of his promises during the campaign to make “America Great Again” seemed to have a hollow ring with his conservative base that upset Mrs. Clinton in 2016. As he changed his team of advisors he became more aggressive and stood up to North Korea thru negotiations with China. That play seems to have worked very well.
When Assad decided to use chemical weapons against women and children, he immediately sent a message to both Mr. Putin and the Syrian regime that the U.S. would not stand by and allow the use of weapons that all nations have banned. He also bombed ISIS into the next world. So, when you look at his record in foreign affairs, to date it is pretty hard to argue that his methods have not worked.
Now the foreign policy debate starts between the liberals who view Mr. Trump as a war monger that is looking to start the next Iraq disaster and the conservatives who view his foreign policy as a way to make America the power that it has been for the past 100 years. Who wins this one I think will determine the course of foreign affairs for the next 100 years. Love him or hate him President Trump is a decisive leader.
Ask Mr. Seifert
I am constantly asked questions about trading and how to exploit certain market factors to insure success. Each week I will answer one of those questions with a short paragraph.
Is it possible to sell a credit spread that has less risk than reward?
Yes, it is possible to sell a credit spread that has less risk than reward. The trade is called a 60/40. It is an aggressive directional spread. Here is how it works. Normally when we sell a credit spread we sell the ATM strike and buy a strike that is further out of the money. If you use a 60/40, we would sell a spread that is slightly in the money. We are not taking a neutral position. We are trying to predict the direction that stock will move. So instead of selling a 5.0 wide spread for $220 and assuming a $280 risk we would sell the spread for $280 and assume a $220 risk. We never risk more than the difference between the strikes minus the premium we collect from the spread. The difference is in the 60/40 spread, if the price doesn’t move in our favor, we will not collect the entire $280. We will collect a portion of the spread as a profit. The 60/40 is a spread that many professional traders use when they are confident that the price will move in their favor.
The Wise Guy Report: The View From The Electronic Floor
Each week I talk about how the Wise Guys (floor traders) are finding soft spots in the market to take advantage of price dislocations in one of the following major commodities: Gold (GC), Crude Oil (CL) or Long-Term Interest Rates (ZB). In addition, I cover the MSS which is the Mister Seifert Sez Composite Index. This is a proprietary index that I created which measures the dollar flow of the four major indexes (S&P 500, Nasdaq 100, Russell 2000 and the Dow Jones Industrials) on an unweighted basis.
Equities Recover While No One Is Looking
Three months ago, without notice the market collapsed and the VIX went up 400% in less than a week. The wisdom was then that the nine-year bull was over. But while no one has been watching as the market has recovered. In fact, the Russell 2000 is now at its all-time high again. After a nine-year rally, all of the markets are within 6% of all-time highs. The big test will come when and if they reach their double tops. The wise guys have been long since the February blow off bottom. We will see their opinion if we reach the old highs and if the VIX starts to rise. If we start to make lower highs and lower lows look out below. That could be the real break, but as for now the VIX is below its 20-year average and each day the market creeps a little higher. It is still not to late to try and catch this rally but be cautious and have your downside protected!
Get Your FREE Two-Week Trial Subscription
I offer a FREE Two-Week trial to the various subscription services with no cost or strings attached. Each strategy is explained in a 5-7 page booklet which includes sample weekly recommendations and model portfolios. I doubt that you have ever seen anything like this. During your FREE trial, you can paper trade the various strategies and get a feel for the deal without risking a penny. Simply click on the appropriate tab at the top on the Optionomics’ Home page to access the informative booklets and then sign up for one or all of the weekly subscriptions.
- The Bullish – Bearish Credit Spread Strategy: The nuts and bolts of trading weekly credit spreads.
- The 21st Century Covered Calls Strategy: A modern day alternative to the old fashioned covered call strategy.
- The Low Cost Put Hedge Strategy: Sleep at night knowing your portfolio is protected for little or no cost.
- The Earnings Trade: Trade potential big movers with little or no downside risk.
- The One Day Wonder Trade: Get ready for some real action. A one day trade with great results.
Each Monday morning by 10:00 EST, the plays for the upcoming week plus updated model portfolios for each strategy are posted on the site. The prices in the reports are Monday morning’s opening prices. In addition, I have a webinar on Wednesday where I discuss various option strategies, what is happening on the floor and answer any questions that you may have. Don’t worry if you miss the show. They are archived on the site. Sound Good? Good! You can subscribe to one or more of the subscriptions for only $20 per month on a month to month basis with no contract or strings attached. I think you will agree that this is a super offer so give it a try. Click on optionomics@marketedge.com to access the Optionomics LLC web site and get started today doing what the pros do – “Don’t Buy Them – Sell Them”.
Mr. Seifert