Hey y’all,
I hope you got to come out to our last-minute Roundtable session yesterday afternoon.
If you didn’t, or if you just want to review some of it, you can catch the recording here.
Today, I thought I’d recap some top insights I pulled from our experts as they shared their wisdom with traders who were more than a little nervous after three of the worst days in the markets in memory. (At one point yesterday, the S&P had its worst three-day stretch since the infamous 1987 crash)
Let’s start with Kane, who gave the warning to only trade with very small size… and let volatility do the work for you.
“In an environment like this, you don’t want to be risking a lot of capital. What you are looking for is that oversized volatility giving you the ability to make multiples on your money… if you go in at a small size, you can make your normal amount of money.”
I think this wisdom is extremely valuable.
Right now, volatility is very high, and VIX is seriously elevated (although it’s dropping as I write):
That volatility typically means that options are more expensive, but it can also give you more leverage — since bigger moves are likely, you don’t need as much money to get the same positive result.
Therefore, you can control your risk before you even jump in a trade simply by limiting your trade size and being cautious.
Lance surprised everyone by extolling the virtues of selling premium right now.
For anyone who knows Lance, he has been very anti “income” and anti “credit spreads” throughout his career — but this current market environment is changing his tune.
“The market makers implied about a $100 move in the S&P… I was getting insane premiums… So I was selling calls on SPX… I don’t wanna get too caught up in the overnight stuff. I don’t know what happens tomorrow. So what I’ve been doing is limiting my exposure to risk by really just selling premium — so bull put credit spreads on SPX and really, I’ve got a 100 point cushion.”
The implied volatility (IV) is insane right now, as we were just discussing with Kane, and Lance shows us another way to make money off what the options makers are doing.
It’s also a good reminder to never get stuck in a box in the markets.
Lance is one of the best directional traders I’ve ever met, and even he is stepping back right now and saying, “it’s hard to pick direction, so let me sell premium in the meantime and make some cash off all of this volatility.”
While there are a thousand other positive things I can say here, let me conclude with one from Nate.
Nate says: look for the X pattern on retail and institutional trading.
“When retail is finally the most bearish, and insiders are finally the most bullish, when that happens, I think you have most likely found very close to your floor, and you can start accumulating with some confidence.”
Nate brought up and shared this chart, showing that insider selling was extremely high while insider buying remained very low.
Even since the Roundtable, we’ve seen a massive decrease in insider selling and an uptick in insider buying, both positive signs.
But what he really recommends we watch for is the crossover between insider buying and retail buying.
When retail is panicking fully, and insiders are starting to see opportunity, it’s a likely leading indicator that we are at or very near the bottom — once you see that, you can start to invest with confidence again.
Now, I could share a dozen other really valuable tips and tricks and techniques I picked up yesterday, but that’s what replays are for ( check this one out here).
In the meantime, I hope you have a fantastic Tuesday. It looks like the markets are up big early on, with some signs of tariff leniency starting to emerge from the White House. Let’s hope that continues!
Either way, we’ll be here to guide you through it.
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