I must say the complacency in the market surprises me a bit. It seems like the market forgot that there is a significant war going on in Europe that can very quickly escalate to a level no-one imagined since the 70's. Despite these terrible events the VIX is down from the recent 37.5 to 21.67.
United States Steel (X) continued it's insane rally going over $38, which equates to a nearly 75% increase in the last month and over 112% in the past 2 months. It is no surprise that the big banks are flagging it as underweight, meaning that they expect the price to come down.
At this price level I would sell call options against X for sure, but because I already have a position on, I selected something else for today.
So what's my today's pick?
#EWZ ( #BrazilETF ). The rally over the past couple of weeks followed a similar pattern to the US market and because I did not want to go directional, I chose a very wide strangle with close to 80% probability. The IVR is not ideal but this trade is more of a run-to-safety for me as I am not comfortable with the market movements at the moment. This trade would not make anyone rich and I certainly don't expect it to be a fast one either but it's better to make a small profit than to lose big.
Another factor note mentioning is that I now start to look at trading the May expiry instead of April.