Wow, that was one for the record books.  The market is still blood red on my MTI indicator.  It has been since Feb 24 with the SPX at 6000.  Yes, having the right indicator helps.  Which, by the way, is when I "Turned to the Darkside" and went bearish after being bullish for two years. (see below picture).  Pros aren't afraid to move their feet and do what needs to be done.   Unfortunately, this is not over.  Yesterday's rally was a squeeze for the ages and very short/leverage driven ( see my video below for how that works ).   But earnings estimates have barely budged.  They need to come down. The market is still rich for the reality that the economy is facing.    Are we in a recession?  No.  Are asset holders still wealthy?  Absolutely.  So I don't want to overstate the damage.  I do believe that paralysis by consumers and businesses can be more or less transitory.  But they need NEWS - soon.    Savings are good, cash in money market accounts is plentiful.  But folks aren't happy and they WILL start voting with their sell buttons.  We need more and better headlines on tariff resolution.  Or this will become a durable problem.  With earnings season upon us we may not be hearing much that is positive from CEOs.   THIS is what helped to push stocks higher yesterday.   https://youtu.be/KfVbUkyT8jE?si=jfhuDbpLR0TOXtGI&_kx=ONXv6EGiagUaYqwpEDGbxw.VJ3wEe May the income be with you folks,   Hans Hans turns to the Darkside in Feb. SPX just under 6000.

It’s Hans, your friendly neighborhood option afficionado - and HEDGER.      THIS.  IS.  REAL.  Trump just laid it down thick.  Unapologetically, and with typical gusto.      He's a showman but I'm not sure everyone's enjoying this episode.  The ball is now in the other court.  I'm not sure I would be playing a game of chicken with China. They may not care. They don't need to do what's "best" to get re-elected. Lesotho, a small country in Africa that received the highest retaliatory tariffs, will fold faster than a patio chair at the end of summer. China is going to say.... GAME ON. So for markets, 2025 is clearly not business as usual.   🎞️Check out my new video for some things that I’m seeing, watching and thinking about….🎞️   Also, folks may not know this about me... but I didn't just run hundreds of millions in options income funds, I also managed downside crash protection funds as well.  I'll be doing another session next weekend.  It will be $497 for a 3 hour workshop that will be recorded.  If your life savings aren't worth $497. Those who took it in early March saved $millions in pain and are over the moon happy. I've been telling Trading Room members and students to hedge hedge hedge since 5750.   In interested email Natasha at info@cashflowinsiders.com - by invite only.   Stay safe and may the income be with you,   Hans   PS:  reviews on the last workshop:

Well, what can you say after a couple of days like that…except yowza .  Fed rate cut and a new President in office. We’re also saying thank you because we were set up for success. We did the work, we came in prepared, and we killed it. The market was prepared for a Trump win, but perhaps not prepared for the breadth of his dominance.  But for options volatility (the VIX), it was more about getting past the event. The not-knowing was the tough part for investors and once we had a clear winner, the floodgates opened for markets.  But, while broader strength was yuuuge… right out of the gate there was a Zeitgeist-changing shift in themes and sectors. Big cap tech mostly remained subdued on Wednesday while sectors like financials roared into the prospect of dis-regulation.  The Bitcoin complex soared with a Team Trump that will be very supportive of cryptocurrency in the years to come.   And…knowing what’s good for them, leaders in Big Cap Tech, from Zuck to Bezos to Pichai, all came out to kiss the ring with sweet messages of well-wishing to President-Elect Trump.  And then they TOO rallied yesterday – META a case in point – sneak peak: our high-conviction put sale from earlier in the week has captured 60% of premium in only a week.  2.8% on risk in 5 trading days?  Not too shabby.   Readers, what you need to take away from this is…. This is a new world for equities.  Under Trump’s tax cuts and spending plans this may become a debt-be-damned free for all.  Until it stops, but that’s a worry for later.  As I mentioned on Mark’s show – the market might male cause it can only focus on one thing at a time.   And right now that’s chasing performance into year end.  The pain point could still be to the upside.  Corporate buybacks are massive in November, especially in big tech.  Volatility targeting and CTA flows will be very positive the more we see volatility come down.  A 10-year yield of 4.5% worries me, but the tailwinds are numerous.     This coming week will pale in comparison to what we just experienced from a news standpoint.  And with big events out of the way sectors and themes will continue to jockey for position underneath the index hood.  I’m looking for sea-change type plays to make.  For example healthcare under RFK’s guidance, innovation under Elon, crypto, financials and more.  I believe there is gold to uncover as we figure this out.   Our trades are doing great once again.  As mentioned we are sitting on great gains in META.  Our TSLA upside structure made bank on the Trump/Elon slumber party Tuesday night.  Our upside call spread captured 85% on risk in a couple of weeks while some short puts captured 75% of premium received.  COIN position cleaned up as we pieced out out very large call spread into that 30% move in the stock.  We sold some early but actually closed most of it with the stock up $56 - we paid $1.50 and sold the balance at 39.10. That is NOT a typo.    We sold some more covered calls in PANW to pocket 5.5% on risk for the next 46 days of work.  We sold some covered calls against HOOD, way too early but a win is a win.  We will look to roll up this cash-machine play on any small pullback.   Our AMZN play has been huge and I’m holding on.  I’ve been shouting from the rooftops since 185 and it hit 210 yesterday, my first target.  I may roll it up.    Our NVDA cash-secured puts are up big but I held post-DOW inclusion and the 125 level is pretty safe into this melt-up.   Our ULTA put credit spread is about to make full value – 10% on risk in under 20 days – but let’s not count chickens just yet.   Good times but let’s not become complacent.  I continue to look for collaring opportunities into significant strength. Also, as I mentioned on Oct 22, the upside cheap skew would probably normalize on a strong move up, and that's exactly what happened. Let's see how to play it this week but I have a couple of good ideas....   May the income (and sugar rush from leftover candy) be with you. Hans If you want to trade like a pro (an actual pro, not options hobbyists) let me know. www.crushthepremium.com/training for various options to work with me. Bespoke 1-on-1 mentoring also available for $5000 a month. Almost unlimited access to me, all programs, all trades. As good as it gets for people who want to take this seriously and have the means ($1M+). If you have $5 million+ this is a no-brainer - having a pro who has managed $1 billion professional looking over your shoulder - I'm sure you're leaving a couple hundred thousand on the table every year. Reach out to Natasha directly: hans@cashflowinsiders.com

The tweet below from a covered calls “expert” highlights the exact dangers of using Covered Calls and Cash-Secured Puts on the wrong stock. I’m not naming the person who wrote this in 2021 because it wouldn’t be fair, as I’ve made my share of bad picks too. However, the issue wasn’t so much the stock itself but rather the application of a long-term option selling strategy to it.  It was terrible advice and illustrates a critical point about selling options: whether you’re a trader or an investor, the quality and stability of the company matters significantly to this strategy. And this has nothing to do with hindsight as you'll see. The author described SQ as a promising company in digital payments. True then as it probably is now.  It may have had strong prospects, but in 2021, it had surged by hundreds of percent to a P/E ratio of over 400. Despite rising earnings during the pandemic, its cash flow was highly erratic, and it was undeniably a high-flyer with a nosebleed valuation. Enter the covered call strategy. The author suggested that while dividend stocks are fine, covered calls are a better path to financial independence, especially for those without enough savings to rely on traditional dividends. Option premiums on stocks can indeed exceed traditional dividends.  He says that covered calls are 4 times better than dividend growth investing.  Ok. Wow. A few key points to remember: 1.     This advice risked pushing people out on the risk spectrum without acknowledging (or being aware of) the dangers of doing so. 2.     Yes, options can create yield on high implied volatility (high pricing) stocks that don’t otherwise provide yield. However, many no-yield stocks are more speculative and prone to volatility. Selling calls simply doesn’t transform these stocks into better companies and comparing them to dividend payers is misguided. 3.     Dividend stocks offer yield while allowing investors full upside in the stock. With covered calls, you retain much of the downside but only some of the upside. The performance profile is drastically different. You might argue that even quality stocks can get hit hard, as seen in 2022. True, but quality companies typically recover. They have better chances of stability and recovery, while speculative, cash-flow-poor companies may plummet to zero or languish as dead money for years. For instance, SQ fell over 80% following his recommendation and has only slightly recovered, still around 70% below his recommended level and roughly the same price it was at over two years ago. In contrast, quality balance sheet, high cash-flow, wide moat and higher margin companies have generally thrived since 2021. You might think you can sell premium on the way down to defend, but selling calls on a rapidly declining stock often still results in poor capture. You also risk losing your position below your cost basis, and the absolute yields you harvest won’t be as lucrative as before. This is crucial and often overlooked. If SQ options yield, say, 30% a year in the at-the-money options: 30% on $70 is much less than 30% on $233, assuming implied volatility remains similar. Your income drops to a third of what it was and you principal has been decimated. How’s that retirement plan going? This underscores a significant issue with covered calls, and the crux of the takeaway today: you’re creating a bond proxy on a product that has full principal risk. Unlike a bond, which guarantees your principal at maturity, a covered call on a stock has no such guarantee. Your principal can drop to near zero in theory.  This strategy is not to be looked at as a kind of secure bond, as I fear so many do. But it can  be approximated to a bond-like approach if certain strict conditions are met. We must strive to ensure our principal is preserved long-term. But that means prioritizing quality is paramount. Quality companies should endure and bounce back, though we can never be 100% certain.  There is however a great deal of evidence that higher profit and high free cash flow companies outperform over time by a fairly significant margin. For example high free-cash flow companies tend to outperform the rest by around 18% per year. High gross margin companies tend to outperform by 3-4%. Selling puts in quality names has outperformed by a wide margin. Will you get less premium for those names? Probably. But are you in the business of trading for excitement or are you in the business of actually retaining premium and making money over time. You decide. The dangers of following ill-informed advice, especially on social media, are very real.  Make sure you’re following the right people. People with almost 30 years of having done this professionally, managing a $billion in options strategies and having generated $750 million in options cash flow for investors. That's me. And the best part? You can learn to do this... Like and follow and check out the Cash Flow Insiders Program. It covers topics discussed here: rules, guardrails, gauging market and stock sentiment and quality, using option deltas as a tool to trade reality rather than hope, finding edge, and avoiding pitfalls. It offers frameworks for handling volatility, managing options, retaining upside, and more—essentially, how to trade and manage like a professional. Membership includes 5 weeks of live and group mentoring from me (one-on-one mentoring available for $5000 for 3 months as well), the 20+ module CFI video class, the 99 module 16-hour Gamma Option Mastery course ($797 value), the Nomad Iron Condors Course, the proprietary MTI sentiment indicator, tools, scans, and last but not least… 3 months access to the best options trading and investing Discord community around,  a supportive and growing group of smart traders working together to improve each and every day (Priceless value). Enjoy scans, paid services for free, trade ideas (huge wins last week), education, comprehensive charting packages, weekly live Q&A with me and special guest experts. It's like having a pro look over your shoulder. Join the Cash Flow Insiders Option Crushing and Investment Program . It starts January 30 so check it out:  Go to the Enroll Now tab .  We can also send you a Paypal invoice if you prefer. Alternatively reach out to Natasha to schedule 15 minutes with me . NO pressure - that's not how I operate. I'll tell you about the program, give you a great offer, and you decide. Students have called the program "extraordinary" - it speaks for itself. info@cashflowinsiders.com Hans CEO

With Halloween around the corner I can’t help but feel that the VIX is currently a 12 dressed in a 20 costume!  VIX is now TRIPLE realized volatility, otherwise known as ACTUAL market movement.  So while the broader market is experiencing very little movement, fear gauges like the VIX are very high.  And rates volatility?  Even higher.  Bond volatility is about as high as we’ve even seen it ahead of an election.  Why?  Well, take your pick… pivotal election, pivotal FOMC meeting, and just maybe… pivotal amounts of debt.     Since the Fed cut rates by 50 basis points we’ve seen rates going nowhere but up.  The 10 year yield has soared from 3.70 to 4.25 – an almost record move.  That is not a rates market that is on the same page as the Federal Reserve.  But this isn’t news to me.  As I’ve been saying for months, the risk is not that the economy slows or that employment rises, it’s that inflation begins to rear its ugly head again.     Markets are stable this morning as GOOG didn’t disappoint.  That’s a good sign for the ad spend world and that is pushing META close to 600.  Our risk reversal trade from last week?  Almost a home run at this point.  In at $1.25, we took off half at $13.40 yesterday.  At 600-605 I will sell the remaining.  But my data is showing that Mag7 is still very underowned and I’m looking for further follow through as the year winds to a close.     Leading Economic News Coming Out This Week   Yesterday’s consumer confidence numbers were MUCH stronger than expected.  While this is positive for growth in general it once again dismisses any hard landing talk.  The labor market remains in very good shape and in fact is improving.  But that also highlights my main concern which is that the Fed is stimulating an already strong economy while budget deficits rage on.  Neither Presidential candidate seems to care about profligate spending.  At least not until they get into office.  Hence, high rates volatility.  Markets will be watching each and every data point from here on in.  We need that rates vol to break lower for markets to breathe a sigh of relief.  You can watch it yourself by looking up the MOVE index.   GDP numbers a little weaker than expected but job creation much higher. Personal spending and PCE inflation numbers coming and then non-farm payrolls and the unemployment rate on Friday.  Oh, and throw in manufacturing data for good measure to round out a massive week of data and earnings.  But again, markets have been incredibly stable in the face of all this…. as they await the even bigger events of next week.  It’s feeling like a few Super Bowls back to back to back.   Quality Watchlist   Our trades are thriving, with the aforementioned META position killing it.  At $563 my target was $613 – we’re already near $600 and the darn earnings aren’t even out yet.  COIN continues to print coin.  Our MARA call is doing well although it pulled back yesterday.  Covered calls in UBER and Palo Alto continue to bake off nicely.  UBER earnings are this week as well so we’re watching for that – I’m not a huge fan of selling premium into earnings.   I’m looking to strap on an upside butterfly in MSFT if things line up nicely.   Recent Winners   The BABA condor is working nicely – I wanted to cover my short 155 call but instead took the opportunity to pick up a Dec 130/145 call spread for almost the same price.  This gives us massive upside if China decides to go for another run higher, which it will in due course.  Our HOOD cash-machine trade continues to print.  CELH puts are under threat but Micron cash-secured puts are looking good for a profitable close soon.   Our SOFI sale a week ago above 11 was inspired as the stock fell to 9.75 on earnings.  But I’m looking closely for another upside play here.   Our MCD downside fly is sitting pretty – we took off half for a 45% win in 2 days and the rest is on the cusp of doing even better.   But I may have to take it off if I don’t get the move down to $285 that I’m hoping for. For our amazing courses and programs check out www.crushthepremium.com/training which includes access to our amazing trading community where you get trade ideas and massive other value!

The market is acting like a 12 VIX but VIX is pricing much much higher. That throws your brain for a loop but what it likely means is that stocks will continue to bounce off of 1% selloffs like any normal low vol market. That is great for premium sellers who are harvesting implied option levels that stocks never come close to realizing (ie options overpriced). Something's gotta give. If Trump pulls ahead more that could mean a happier market with VIX perhaps coming under pressure. But as it is, we've gone from a period mid-year where NO one wanted protection, to one in which people are overhedged. Aug 5 and early Sep were "events" that are partially responsible for keeping risk pricing up. So is that high fear a sign of bad things? Not really. Folks are long, and getting longer (CTA, vol targeting, upside Gamma void, underinvesting, seasonal...) and have to be protected. So they're paying up. Fact. I get into all that here: https:// youtu.be/GfLxTNBDrqY

What I often do with my students is figure out: where is the blind spot? This is the moment where you don't see or don't want to see something important. In my decades of watching, managing and being an options trader the ball is usually dropped at the "transition" point. The transition is the moment where things change in a meaningful way. Where the picture morphs into something different. Where recency bias wants to prevent you from doing the right thing. Look at A and B in the picture. "A" feels really easy when you're in it. You're collecting put premiums one after another, like taking candy from a baby. When the trendline is broken and B starts to happen, all you can think of is how easy A was. And that recency bias of being right makes it difficult to accept that you might now be wrong. You tell yourself that if the stock can JUST GET BACK to where it was in A you'll get out. The transition is hard. It's where you've made 5000, but potentially need to give back 1500 in order to complete the campaign. Yes, a loss is often the last inning of a good campaign. And the blind spot is where you don't want to accept taking that loss. And because of option selling negative convexity you give back all 5000 and maybe another 5000 on top of that. And that is why some traders just can't get ahead. It stairs up but elevator down if you're not looking at this the right way. Watch for the transition, and don't let it be your blind spot. Click here for my lecture on Mindset if you want to know more about why blind spots are even more important to recognize when selling options.

Is there free option decay to be made on weekends?

People reach out to me all the time. Some are frustrated with their trading. Some want to learn new skills. And some are looking for magic - a special approach or an indicator that will deliver swift untold riches to them. I've managed a $billion in options strategies in my time so they figure I must know something top secret. I ask them... Do you think trading magic really exists? Look at hedge fund performance. Some firms with dozens of 180 IQ MIT quants on the payroll... result? Nothing special for the most part, and often pretty mediocre. Newsflash. There is no magic in trading and investing. Sure, there is some embedded edge in options markets that you can target if you know what you're doing. But in the end, only discipline and a consistent sensible approach that aims to reduce emotion and keep you doing more of the good stuff is what it takes. Because you can either follow rules and guardrails or you can fly by the seat of your pants. You can trade what you think should be happening or you can trade what is actually happening. You can trade for excitement or you can trade to make money. You can keep thinking you're smarter than the market, or you can wait for tailwinds and setups that make sense. Should you take on risk? Absolutely. Plenty. But sensible and well-thought-out risk is very different from a lot of what I'm seeing out there these days in trading-land. If you want magic, good luck in your quest. If you want a sensible set of rules combined with volatility-based guardrails that keep you doing more of the right things and less of the crap ones? Reach out. I also may know a card trick or two. www.gammacapitaladvisors.com hans@gammacapitaladvisors.com

I talked about this chart in my newsletter last Wednesday before that pivotal CPI number... and that is exactly what has played out:  "If tomorrow's CPI inflation number comes in lower than expected and breaks this chart down, we could start to see a stronger broadening of stocks, with Mag7 taking a breather." Sep rate cut is just about a lock and even December is favored.  The real-world part of the market is doing great - stocks like Home Depot, DH Hortons (home builder), even regional banks doing great. Coffee, energy, beauty products. We're hiding in some tech like Uber which I think is "safe" tech, but for now the A.I. party is over, especially with ASML delivering so-so guidance and reports of Trump getting tough on Taiwan.  Small caps? According to Bespoke Investment Group. “History was made today. The Russell 2000 closed 4.4 standard deviations above its 50-day moving average. No other major US index (Dow since 1900, S&P 500 since 1928, and Nasdaq since 1971) has ever closed at that much of an extreme,” the firm said in a post on X. What to make of a move like that? Yes, some retracement is warranted, but massive high-volume moves like that are to be respected. A sea change could be upon us so keep an eye on forgotten stocks in the "real" economy. They've been forgotten for too long and with aggressive rate cuts on the horizon, as long as growth doesn't slow too much the Roaring 20s narrative may continue to play out. Need help with option overlays?  Reach out. hans@gammacapitaladvisors.com