There have constantly been fears of a coming crash due to inflation and over-valuation of companies (extrinsic value is a thing, but over the pandemic its become more and more what people are pushing rather than intrinsic value).
When those fears escalate and people realize their extreme valuations of companies, the stock market will correct (or burst, but I doubt this is the bubble bursting). It is important to note that almost everything is doing worse than what even the most negative statistical models claimed, especially the tech industry.
Hence, last week I started rolling credit spreads on SPY. The panic is insane. Today I opened 3 call credit spread, premium width of $24 on a $1 spread expiring tomorrow with a 90% chance (based on basic models) of profit. There is almost no way there will be a recovery of that size by tomorrow. Only reason I'm not doing naked calls is because RH doesn't let me, and other brokers don't let me do spreads yet.
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u/13steinj Feb 23 '21
There have constantly been fears of a coming crash due to inflation and over-valuation of companies (extrinsic value is a thing, but over the pandemic its become more and more what people are pushing rather than intrinsic value).
When those fears escalate and people realize their extreme valuations of companies, the stock market will correct (or burst, but I doubt this is the bubble bursting). It is important to note that almost everything is doing worse than what even the most negative statistical models claimed, especially the tech industry.
Hence, last week I started rolling credit spreads on SPY. The panic is insane. Today I opened 3 call credit spread, premium width of $24 on a $1 spread expiring tomorrow with a 90% chance (based on basic models) of profit. There is almost no way there will be a recovery of that size by tomorrow. Only reason I'm not doing naked calls is because RH doesn't let me, and other brokers don't let me do spreads yet.