Positioning Looks Like Another Dump Is Coming
Between the Lines - Vol. 5
It’s been two weeks since I last wrote, new son and the market did exactly what it was supposed to.
Let’s do the unseemly thing first…
Last time I wrote, the S&P was in the 6600s, consensus was that the bounce had already gone too far, and I said the path of max pain was 7,200. Spot as I write this is 7165, 7,000 in Q2 was my call. We are past it, and we are past it on the exact set-up I described.
The trades have done the talking while I have been inactive on the writing front (although I do plan to release the Zero to Options Hero post soon)
SPX 6500/7000 risk reversal for 6/18 put on at -18 now marked at 265
SPX 5900P for September sold for just shy of 200, now trade at 65
Phase 2 basket continues to do its job
Phase 3 still a smidge off where I would like it
CRDO (purple cable go brrr) at 6% nearly approaching 200 (I shared this in the mid 40s last year) now a 3% weight after taking some gains off at Friday’s close after reaching the $200 price target.
The list is, frankly, too long to keep going - there’s some pain in the software names I hold, but overall, the book is outperforming, and that’s what matters.
I leaned the right way when CTAs were “max short” and the doomers were lining up for their oof moment. And I also leaned the right way through the lazy “the bounce has been too much too fast” consensus that we saw in the first half of April.
But the trade has changed. The market did what I wanted. Now I'm doing something different. And I think most people are about to give back what they just made even if index keeps trading higher.
