MM54 - The Power of Seven

This one has come up a few times in Kilo Club lately, so I want to walk through it with you. Quick reminder before we start. This is not financial advice. I am not a trading advisor and I am not a CPA. With that out of the way, let us get into it.

Here is the question I keep getting. There is so much market weakness right now, and a lot of our favorite names have pulled back hard. So what options trade am I looking at? The honest answer is that the setup right now does not love my usual tools, and I want to explain why before I show you what I am doing instead.

The problem is volatility. Implied volatility is extraordinarily high right now. When you buy high IV, you have to simultaneously sell high IV to offset it, and this market is not letting me do that cleanly. A modified synthetic long needs the put spread I sell to bring in enough credit to offset the high IV I am paying for on the in the money LEAP call. Right now that credit just is not there, so the modified synthetic long does not work for me today.

That pushes me toward a plain synthetic long, and I love a synthetic long. But I do not love one until I have found what I believe with 90 percent certainty is the bottom. I cannot say that right now, so that strategy is off the table too, at least for today.

So where does that leave me? I have been pulling money off the table. I took profits on Marvell, on Micron, and on Astera Labs. I have talked about all of it in the Kilo Club, and I posted it in Rapid Fire in real time, because this is what I do every single day and I want you to see the thought process. And today I did something different. I started scaling back in.