Power Plays Options Weekly Roundup
April 11, 2025
By Scott Redler
The market environment remains very challenging because it feels like a tug of war.
It's hard to find longs for anything other than short periods of time.
At the same time, it's easy to get knocked out of shorts on a surprise headline out of the White House.
Right now, the bond market is a huge challenge for equities.
The computers seemed programmed to dump stocks when yields are on the rise.
And that's why I'm advising everyone to keep TLT on their screens. If it breaks the morning lows, you better buckle up.
This morning, we got a cool PPI, following the cool CPI yesterday. And that was followed by soft Michigan Sentiment numbers.
Plus, JPMorgan's (JPM) Jamie Dimon came out cautious on the economy, saying earnings estimates have to fall further because so many companies are likely to pull guidance.
This supports the stagflation scenario many are fearing, which is a problem with equity valuations still elevated.
So we shall continue playing defense and being very selective with new ideas.
This is time to be patient. Not the time to be a hero.
I've been saying for weeks that the SPX looked like it was heading lower, and there is still the potential for more downside ahead, especially if we keep seeing trouble in the bond market.
Right now, the market wants to see the US and China get together and resolve the tensions. Until we get that, the tape will be very jumpy.
Now let's talk about our current names.
IBIT 5/2 $50 Calls: Bitcoin is acting much better than most risk assets and may be decoupling from equities and following Gold, which has been ripping. I added calls today because I see more upside ahead.
XLE: 6/30 $95 X $105 Call Spread: energy has been hit hard as the tariff news crushed oil prices. So this position is underwater.
BABA 4/11 $145 Calls + BABA 4/11 $145 X $150 Call Spread: BABA has struggled since losing the $145 level and these positions will expire worthless today.
MSOS 6/20 $4 Calls: we haven't gotten any news to drive up the cannabis sector, so this position has not worked out.
-Scott
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