Trump wants to take on China, he wants US companies to pull out of China and set up operations somewhere else, mainly the US. This issue is not going to get resolved any time soon.
Trump is also not happy with the Federal Reserve, asking them to accelerate interest rate cuts.
“They must Cut Rates bigger and faster, and stop their ridiculous quantitative tightening NOW,” Trump said in a series of tweets this morning.
The president has been asking the Fed to lower rates for months to help the US economy and now is blaming the fed for the recent volatility.
The combination of these events has left a lot of uncertainty in the market, and stock traders are feeling the pain.
Options traders are not except, but those who have the right positions on are in significantly better shape.
Option Strategies Insider members, do have a couple of problem positions, but these are all hedged, so the recent market drop is only hurting these positions a small amount.
We also have positions that benefit from a market drop, overall, our Executive portfolio is up since the start of the week.
There is no telling how far things will drop, but at the current market level, stocks are starting to look cheap. It does not mean they won’t get cheaper, in fact, they likely will, but if there is something you have wanted to buy on the next pullback, this may be the moment.
Taking a page from Warren Buffet, “Be greedy when others are fearful.”
An excellent method for getting into stocks that you want, but that you are worried my go lower is to sell downside puts. If the market drops below your strike price, you will get filled and have to take the stock at the lower price, while also keeping the premium.
If the market trades up, you won’t get the stock, but you will get paid to watch it trade back up.
Overall I would say the market is holding at this level, there is plenty of money on the sideline waiting to come in, we are late in the economic cycle. Things may seem bad at the moment, but it is really an opportunity for the smart investors.