On the latest Market Mashup, Patrick Martin sits down with Cboe Global Markets' Jermal Chandler, one of the Senior Instructors at the Options Institute and the Senior Instructor of Market Insights. Patrick and Jermal chop it up about the COVID-19 impact on various sectors including retail, real estate, and travel (2:39). Jermal also breaks down what Select Sector Indices can do to a trading portfolio (13:10), plus how its volatility stacks up with the S&P 500 (15:35). They close with a look at what the November 2020 election can do to sector performance and dispersion (20:56).

Transcript of Schaeffer's Market Mashup Podcast: September, 2020

Patrick: Ladies and gentlemen, welcome back to the Schaeffer's Market Mashup. I am very excited about today. Please welcome our latest guest from CBOE global markets, Jermal Chandler, senior instructor at the Options Institute. Jermal, how are we doing today?

Jermal Chandler: Doing great, man. Thanks for having me on, I really appreciate it.

Patrick: Yeah, likewise, likewise, before we dive in one, congratulations on Chicago's epic weekend of sports, you can, it's a laundry list of accomplishments you guys had. So tip of the hat there, let's just start with your background on your career and your current position, you know, give us some information there.

Jermal Chandler: So before I came into the industry, I was actually a chemist and engineer for about 10 years. So you know, I have a couple of different publications from, you know, through what seems like a century ago. And that was my background prior to coming into the industry 15 years ago; I worked at Prop Trading firm here in Chicago. Which there’s abundance of those here? So I worked there for almost 10 years and then I had a stint in the regulatory side of the business as well for a couple of years there. And that's actually how I started at CBOE in our regulatory group. And now I've been at the CBOE and the options Institute, which is the educational arm of the company for almost three years now

Patrick: What I like so far is I've interviewed, I think now four people from CBOE is everyone has bounced around within the overarching company. Like there, they have experience in so many different fields. It's fascinating how they're so well-rounded, and I think that applies to you as well.

Jermal Chandler: Yeah, I think, you know, we've tried to get together, an eclectic group of people with years of understanding in different areas and I think it shows.

Patrick: Yeah, absolutely, absolutely. So well, we're going to talk about the elephant in the room, really the COVID-19 crisis it's created a devastating impact on every economic sector. Drastic measures are being taken to limit it to our wider economy, but it's no secret that the US as with a lot of other countries in the world, it's facing a long road back to a full recovery. So let's start back in the beginning, back in February or March. However you want to look at it, which industries and in the larger sectors that they were a part of were most heavily impacted at the onset of this pandemic?

Jermal Chandler: Well, that's a, you know, it's an interesting starting point, Patrick, because there's a couple well, you know, we can start at the travel and leisure. I mean the entire travel industry has been affected as people quarantined in their homes at the beginning of the pandemic. Hotel occupancy rates are down over 50% year over year. When you look at the [unclear 03:10] data, cruises were shut down in mid-March and initially had no sale orders until July. That was eventually extended until this month, September. Airline revenue collapsed as passengers canceled trips and countries imposed bands. I mean, airline stocks plunged on bankruptcy fears at the beginning of this whole thing. Even Warren buffet bailed on airlines that should tell you something. Now we did have the cares act, which provided a $50 billion package for payroll grants and loans that help prevent the widespread of layoffs until at least October. But even still, I mean year over year PSA checkpoint numbers show total traveler through PUT at US airports is only 30% what it was year ago.

I mean, simply put people aren't flying that much. And as a result of planes not flying, one would imagine there's not a whole lot of refueling, which gets us into energy, oil investors are not likely soon forget the first time in history when they saw oil prices go below zero. And COVID-19 forced lockdowns around the world and destroyed demand for oil products like gasoline and jet fuel. BP recently is on record as saying the Arab oil demand growth is over and oil consumption may never return to the pre pandemic levels. I mean, that's pretty interesting coming from a huge company like BP. 

Patrick: Very Impactful.

Jermal Chandler: And then there's, like a ton of bankruptcies in the sector. When you look at Chesapeake and Whiting, Chesapeake Energy and 04:29 petroleum are two well-known ones. It's also interesting that at this time we're witnessing this surge in electric vehicle production. Is that a coincidence? I don't know. So it's just a tough time for the whole oil and gas industry overall. Then when you look at restaurants, I mean, they were affected in a unique way from job losses to supply chain shortages, and they had a rough go of it. Year over year, seated walk-in comparisons at diners in the US are down 35 to 45% according to data from open table. And so even as restaurants begin to reopen seating limits became a new challenge, right? 

Like all of a sudden you have to pay attention to the weather if you're a restaurant owner, because you have to make sure that it's not going to rain that day. Rain is just going to kill your profits for that. Now some of the larger restaurants are starting to change with consumer habits. And that's the interesting thing about this pandemic. We see deliveries becoming a huge prominent part of our society. Customers are downloading, you know, not only just delivery apps like Door dash and Grub hub, but they're also downloading actual restaurant apps. You know, like Chick-fil-A has, their app has been one of the most downloaded on the Apple app store from what I understand. So, and then you're starting to hear about fast food companies recently are radically redesigning their restaurants because nobody's eating in there. 

So now you're just having to make more situations for drive-through to be more viable. And then finally retail. Now retail is broad, but when we first talked about this at the beginning with retail, it was Walmart, Target, Costco, they were seeing a huge boom at the beginning of the pandemic because people were flocking there for all the essential stuff like toilet paper and bleach. Eventually you could throw a Best Buy in there because it became apparent that we were going to be in the situation for some time and people needed more tech to work and learn from home. But then there's the retail where you're talking about people buying clothes, right? And things have drastically changed there because people are no longer wearing upscale attire for work as much people are starting to wear athleisure. So when you look at things like JC penny and Neiman Marcus and Lord and Taylor, all of these stores that were sort of dying a slow death anyway. They finally went bankrupt and consumers are largely buying online now. So in that, but we just talked about was retail, travel and restaurants, which is the consumer discretionary sector. And then oil of course, is the energy sector.

Patrick: Yeah, I feel like you hit them all right on the head and a couple of points that I wanted to kind of expand on there. You mentioned the airlines, we wrote an article here at Schaffer's a couple of weeks back that mentioned the TSA travel figures. So on Sunday, August 9th, the agency saw 800,000 people at airport and checkpoints, which was its first reading above 800,000 since March 17. And at first glance you think, wow, that's great everyone's kind of biting the bullet and taking the calculated risk. But then when you look at what that number is compared to last year, it's not even half. So it's such a long road to recovery, so on that note, you know, what sectors appear to be on that road to recovery, even if only slightly like the airline one?

Jermal Chandler: You know I would have to say the real estate sector; real estate is down 8% this year. And we've often heard about at the outside of the pandemic, how folks were able to put their mortgage payments on hold. So that was an interesting time period, right? Now this also happened for companies as well, whether they rented space at a shopping mall or a strip mall, we were, they were, we were hearing about places putting their mortgage payments on hold. But, and you know, you also see commercial real estate seems to be in trouble for the time being, as we've seen this exit out of cities for buyers fears and some social unrest in some situations overall. But however homebuyer interest has blossomed as ultra-low interest rates have made it attractive. There's also a few statistics that point to strengthen the housing market. I mean, just a couple of weeks ago, the US census bureau reported new home sales search, 14% on a month to month basis in July. And then the comments department also showed that the nation's home ownership rate hit 68% in the second quarter, which is the highest level since the third quarter of 2008. So I think overall real estate has always been pretty cyclical and I wouldn't be surprised to see it get going again.

Patrick: Yeah, I can give you a personal anecdote. I looked around, my dad visited me in Cincinnati in June, and we looked at a place to buy here in Cincinnati. It was an option that was previously off the table. I, we've, we vacation down in South Carolina and Kiawah island all the time. And I looked at him and said, Hey, why not just look at Kiawah island and do a vacation home? And I continued to kind of have, live up here in Cincinnati and down in South Carolina. And the interest rates made that happen and especially the demand it's fascinating how that has opened up some options for people that can't afford it. But let's pivot back and talk about the sectors that have done well. You mentioned them a little bit earlier, which are the most sustainable and will that continue? They continue to do well after the pandemic because I think of two off the bat, like Draftkings.com, a ticker DKNG and Peloton where this new normal has benefited them. But will that benefit them when the pandemic is in the rear view mirror? 

Jermal Chandler: Yeah, for sure. Those are two good ones and let's be honest here. I mean, this directly speak to the tech stocks and the entire technology industry, right. I mean, we've seen what has happened in that entire industry and it's been interesting to watch as far as what's going on with those stocks. We've clearly become relying on technology on a global scale, like never before will it continue? I say yes in some areas and no in some others. So we talked about restaurants and the delivery apps as well as e-commerce for retail. So I think that tech is kind of here to stay in my opinion. Then you talk about Adobe and DocuSign. I mean, there were on the rise pre pandemic. Now they've just become too easy not to use. It's almost like they say about Amazon. I mean, once you get on it, it's hard to get off.

Now I believe this could also be the case with digital payments, when you're talking about Square, you know, Venmo, which is owned by PayPal and then Sell, which is owned by a couple of different banks and a partnership. So I think those are kind of, are going to be here to stay. Now, eventually people will wean themselves off of Netflix maybe, right. And possibly by design, when you're talking about other tech like Chip Processors, like Nvidia or AMD or Intel, I mean, those will kind of slow down, maybe like a year and change from now. So I think in some regards, those will, we'll see a little bit of a pull back on those, but you know, some of these other ones are going to be around for a while. And then, like you just mentioned these new kids on the block, Peloton and Draft Kings. I think it all depends on how well they can integrate them into the society, so far I think they're off to a really good.

Patrick: Yeah, I agree. And I think it's, like you said, that's a great point it's kind of the same I think of off the top of my head, Uber or Lyft, you know, there's no longer the cab numbers that you have to have, you know, stored in your phone to call people. And so, that could be a, you know, a paradigm shift right there. 

Jermal Chandler: I totally agree. I mean, Uber and Lyft, like that's one where I, when I used to go to the airport, which has been awhile, I used to drive now I only take Uber and Lyft to the airport.

Patrick: One sector that I am not concerned about, but it does raise an eyebrow is when you talk about, when you said the restaurant sector. How all these companies are struggling to adapt, they adapted very well I think in the summer, when you could just open up a couple of barriers and have outdoor seating. It was cold today for the first time in Cincinnati and I'm sure it's cold in Chicago. You know, when that fall weather that crisp weather starts to hit and people don't want to be outside, they want to be inside watching football. You wonder how these restaurants are going to do because the numbers still say that that's technically not the safest thing to do right now. So I wonder how that sector will maintain until this thing is entirely over. But let's pivot here and talk about select sector indices. Can you tell me more about these because I've heard from, you know, a little birdie that says CBOE has them and so tell me more about them and their potential utility?

Jermal Chandler: Your birdie is correct. So CBOE provides index option products for the 11 sectors of the S and P 500. We call them sector, select sector indices, for those seeking an alternative to ETF options this is probably something that they could look at. Now they provide a larger notional exposure and just like all index options they are casts settle, which is a nice feature. They also, because their index options are subject to the 1256 tax treatment that could provide potential tax advantages amount. You always want to make sure you discuss that with a tax advisor so to give an example, let's just say you own we just talked about real estate, so let's use real estate. So you own a bunch of real estate stocks or some call options [unclear 14:04] and you own those call options, which gives you the right to purchase the index at some point in the future.                                 

Now you don't purchase the index, that's why they're casts settled, right? Let's just say you own some call options or stocks and a month goes by and you feel somewhat overexposed to the sector. You could go and purchase, PUT options on that index, which is the SIXRE, real estate sector index. So that's one way you can hedge yourself or you could also do a trade, you could trade a collar strategy. Which is and if any of you guys want to look this up it's also an interesting thing, this whole idea of a collar strategy. It's something, it's one of the ways that Mark Cuban was able to preserve his wealth, but the strategy is buying a PUT and selling a call. So usually they're a little bit out of the money so you're basically selling that call to finance the PUT purchase, which is the collar strategy.

So it's another way you can hedge some long deltas there that you may have. You could also just outright speculate on any given sector if you want, whether it's the real estate sector or the tech sector by purchasing call options. Now, one of the things we always talk about with call options, as opposed to buying stock, it's a cheaper way to do that. Of course risk reward is a little bit different with purchasing a call than purchasing stock, but that's another thing you can do. You can speculate on a given sector. So there's a number of ways to utilize these sectors to sector indices to your advantage.

Patrick: So, can you pick a few of them and explain to me how their index volatility stacks up against the S and P 500's historical volatility, because obviously that's so important when you're measuring your point of entry. How much are you going to put in and that's, I think step number one, really?

Jermal Chandler: Yeah. I mean it's always good to understand the idea of when you, you know, have like a sector or a, even when you look at like an ETF, ETF for example, let's just say an ETF has volatility that's lower than a single stock because of the fact that it has a bunch of things within it. Same thing with the sector indices in that type of way, you have a bunch of different things that sort of help equal out equalize, I should say the volatility. So to give you an example, let's as opposed to looking at singles, let's just talk about the S and P 500 index versus these different sector indexes. And we're, in this case we're going to compare S and P 500 volatility to the texts sector index, which is SIXT and we'll continue to prepare the real estate sector index SIXRE.

Patrick: Okay. 

Jermal Chandler: So if you look back to when things were really wild this year, which was, I would say March 23rd, which is probably peak panic time during the pandemic. If we look at we're going to compare a 10 day realized volatility, or also known as historical volatility, some people get confused with that they're the same. So 10 day historical volatility and 30 day historical volatility on March 23rd for the S and P 500 index, 10 day was 110% and 30 day was 71%. For the tech sector index, the 10 day was 128 and the 30 day was 82. And then for the real estate sector index, it was 128 for the 10 day and 83 for the 30 day. So as you can see, all 10 days were above a hundred and all the 30 days were above 80 that lets you know, all volatility was high at the time.                                 

So that's, you know, not surprising now, let's look at round June because I always look at that time period when I'm looking back now, because June eight was this time where optimism was beginning to really become high about coming out of the pandemic. And we had the first, I think jobs report that week or the week, the Friday before, which was really positive. And so people were very happy as far as things were going. We had a huge run in the indexes for a couple of days there leading up to it and after, and so on June 8th, the S and P 500 index 10 day historical vault was 13%. And the 30 day was 22%. For the tech sector, it was 15% for the 10 day and 23% for the 30 day and then for the real estate sector, it was 27% and 33% for the 30 days.

So what you see there is the real estate sector was still a little high. We hadn't quite seen this rebound in some of the real estate names quite yet. We’ve  seen some, but not to the extent that we saw an overall market and for tech, tech was already starting to assert its dominance at that point in time. So that's also interesting, finally a couple of days ago, when we look at the September 14th, when we look at these same type of numbers for the S and P 500 index, 10 day historical volatility was 29% and 30 day was 18%. Now, before I move forward, I just want to remind people we had a couple of days of a sell-off right, last week. And so that's one of the reasons why you see the 10 day vol being a 29 and the 30 day being an 18.

So more recently we had a little bit of a sell off, volatility went up a little bit, and that's why we see that. When you look at the tech sector, the 10 day historical vol was a 46 and the 30 day was a 31 so a lot more elevated than the S and P 500 index. And then the real estate SIXRE was a 19.9 for the 10 day and the 30 day was a 17.7. So what we see there was that tech sector vol was high, which they got the 19:38  of the sell-off. But overall we see 10 day vols are a little bit higher than 30 day vols. So I think it's, you know, this is an interesting way, like you said, it's a good way from the outset to sort of analyze what's going on in your different area based on what we see from historical volatility. Which again, is the idea of what the moves had done in more recent times over a given time period that's what affects historical volatility. 

Patrick: Yeah, and what I think that hammers home too, is kind of the notion that something like real estate is generally inelastic and not as prone to these peaks and valleys that something as volatile as tech is. And I think it's so important that you put numbers behind those kind of feelings, or just kind of general thoughts, because I think that allows you to go forward and start your investing plan, you know, with some actual empirical data to back it up. And like you said, I just think it's a great way you kind of can dip your toe in with the sector and figure out, okay, how is this working? And then you can kind of weed out individual equities if you want it to go that far. And then of course can pursue options or anything like that. So let's shift over to, you know, the big event looming November 2020 election. How does sector dispersion affect this upcoming event? What's the best way to be prepared as market participants forecast these potential changes to the political landscape?

Jermal Chandler: You have an election this year? No, I'm just kidding.

Patrick: Did you hear actually Twitter hasn't mentioned anything about it at all. It's pretty lame.

Jermal Chandler: Nothing at all, yeah. I mean you know, it's crazy because global equity markets across all asset classes are preparing for this election. I mean, everything that you've look at sort of shows you that there's something coming shout out to Mandy Zu and our friends at credit Swiss who put together a great equity piece a week ago. Discovering vol markets or I should say discussing vol markets around the election because they did a great job of sort of putting this in and encapsulating, all of what's going on. I mean, current implied election vol premium as seen within the VIX futures curve is among the largest on record. And it's elevated compared to historical realized election moves. So you talk about recency bias I mean, it's on a silver platter right there. We have this huge surprising result in 2016, right for the election.   

We have arguably a polarizing president. We have millions that are going to go to the polls and millions that are going to vote by mail. And we have a global health crisis with the COVID-19 pandemic I mean, I'd say that sets the table for some volatility. Oh yeah.

Patrick: Yeah, it's a perfect storm.

Jermal Chandler: So as far as political issues, I mean, you have healthcare, you have immigration, you have climate change, you have the economy and you have foreign policy. Now, remember that trade war you know that the US and China have been wagering for about two years now. Well, the constant talk of like tariffs back and forth. I mean, this could be something that could change meaningfully based on the election, so it can have lasting effects on certain companies, stocks, industries, and ultimately sectors. So the ability to discuss, to conduct a dispersion trade is a nice tool to have in the toolbox. An example of a dispersion trade is when you look to, you know, sell vol or I should say sell volatility in an index and then by volatility in the components or vice versa, I think there's going to be plenty of opportunities to do this type of trade with the election coming up. So hey, it's game on. 

Patrick: Yeah. What sectors do you think in particular will be more sensitive to these events coming up, or that will be more kind of dull to it?

Jermal Chandler: I would say number one and I'm no prognosticator, but I would definitely say number one would be the healthcare sector. I think, you know, you've read a lot and heard a lot over the last few years about the different rollbacks that have happened during the Trump administration that were things that were created during the Obama administration. So, I think healthcare is going to be a huge sector. Should there be a change within the white house or you know, within the Senate or the house? I think that'll be a pretty big one.

Patrick: Yeah, I agree. Well, Jermal, I mean I love talking landscape long-term strategy stuff. Like you've just did it's fascinating to me. So we'll end with a couple of quick hitters and then maybe you can wrap up with like one kind of final concluding statement. Number one quick hitter that I've asked all of my CBOE friends. Why is New York style pizza so much better than Chicago casserole?

Jermal Chandler: I feel like I'm being let in on that question there but...

Patrick: This is got you journalism at iits finest right now.

Jermal Chandler: Well, I think it's better for those who are in New York, but if you're in here in Chicago, baby, you got to go with the deep dish. You know what I'm saying?

Patrick: Yeah. I I've never been to Chicago. So I just, I know I've had.

Jermal Chandler: When the bangle site a bear sometimes. 

Patrick: Yeah, exactly. So actually that leads to my next question. How does one cope with Mitchell Trubisky as your starting quarterback? What are the methods and strategies that you utilize?

Jermal Chandler: You, you're happy on weekends like last weekend. How about that recency bias? You know, you're only as good as your last game, so you're happy on weekends, like last weekend.

Patrick: Alright, yeah. Good, that's a very, that's a political answer here. You can, maybe run for office there or, there you go. Yeah, just jump right in. Well, okay so do you want to wrap up with any kind of concluding statement? Anything you want to plug that you're, that's going on over at CBOE?

Jermal Chandler: Yeah. So, you know, I think it's, we really appreciate you giving us this opportunity to discuss a few things going on in the market and particular sector indices. I think there, they provide people this other tool that you can use when with so many different things to be able to trade. I mean, you have, you know, not only a bunch of different equities, we all know that a lot of people are trading different options these days in their portfolio. And it's a good thing to add, sector indices is just another one more thing to add to your portfolio and understanding them I think, like you said, at the outset, understanding this idea of the different historical volatility within them versus other things in your portfolio. I think that's a good place to start so, take a look at them and see, you know, how they can fit in.

Patrick: Couldn't agree more, well Jermal, thank you for coming on best of luck to the Bears this weekend, and maybe we could post-election, you know, do a part two and talk about what 2021 will look like.

Jermal Chandler: Sounds great to me. Thanks for having me, Patrick. We got to do this again sometime.

Patrick: Absolutely, take care.

On the latest episode of the Schaeffer's Market Mashup podcast, Fan-favorite Jermal Chandler is back, with a new title! The tastytrade on-air talent joins Patrick to discuss what he's watching this summer (7:59), i-n-f-l-a-t-i-o-n, (11:40), how to handle volatility spikes as a retail trader (16:40), applying contrarianism to today's SPAC/NFT fads (21:37), and the exciting developments over at tastytrade.com (25:00)

Transcript of Schaeffer's Market Mashup Podcast: May 27, 2021

Patrick: Before we get to this week's episode, I want to take a second and highlight what we've been working on over at Schaeffer's. You've no doubt heard of the popular sell in May and go away trend. Well, as contrarians, we recently identified five stocks that are poised to buck that trend and enjoy strong growth this summer it's only available for a limited time. So, head over to the link in this episode, bio, to get the free report, you can confirm folks. I did say free, check it out without further ado, ladies and gentlemen, welcome back to the Schaeffer's Market Mashup. I'm back from vacation, refreshed as ever stoked for this week's episode. Please welcome back, Jamal Chandler. Now an on-air talent@tastytrade.com and a Lego enthusiast as I had just found out Jamal what's happening, man.

Jermal Chandler: Man, you know, building Lego's every now and again, but in between that, I mean just doing a little bit of work, you know, checking out markets, man. It's good to talk to you again and it's been a minute.

Patrick: Yeah. So, I looked back through the archives we last spoke in September. It's a very different world in those last let's see, eight months. I honestly, it feels like two years, but geez. I mean, we've got election, vaccines, recovery psych recovery, inflation, everything. We'll unpack all of that shortly, but first I do want to clear something up with you, in our emails leading up to this episode, you said you're not an Atlanta sports fan anymore because I had all these Trae Young, Julio Jones things to take on you. So, you turned your back on your childhood team here. What's going on?

Jermal Chandler: No, so, you know, the thing is, is like I moved around a good bit as a kid. So, I grew up in Miami and that's kind of where the roots started. You know, as far as teams, there's teams, that I'm never going to be able to shake and that's the dolphins and that's my Miami hurricanes. Now I did not go to university of Miami, but that's just, you know, when you grow up, especially when you're growing up, when I grew up there, that was the squad man. So those are the main two teams. I went to college in Atlanta and not definitely got love for Atlanta. They got some cool young guns these days, like you mentioned, Trea Young and Julio. We'll, see how long Julio is there, but I've moved around a good bit ever since. And we can touch on a couple of sports, seems a little bit, but Chicago is home, you know, and that's what it is. So, when it comes to the majority of the teams, a lot of them are going to be eliminated from Chicago.

Patrick: Okay, that makes a lot more sense. Full-On Chicago convert, I get it. You're eating deep dish casserole, you know, I'll leave you be there. So, you've got a new role over there at tasty. Tony's an icon over there for sure, frequent guests with us. What makes their options trading mechanics different?

Jermal Chandler: Yeah, you're right. Thank you for the congrats, I do have a new role that I'll touch on. But you know I've been in this business 15 years for the past three, I've been lucky enough to talk to everyday people about options trading and how they can become self-directed investors. And of course, we saw a huge shift in retail trading last year and my good buddy at CBO Henry Swartz has done a lot of you know, work showing this a lot of his charts showing one lot trades, odd lot trades. I mean the retail movement has been undeniable. So, if you're going to inform the retail crowd about options trading, then why not do it with the best? So, I called up Tom Sosnoff, who is a giant in the field. He's also a friend he and the brain trust at Tasty Trade are the creators of that often-used think or swim platform.

And they started tasting in 2011 and Tasty Trade is a financial media network for options and futures trading, unlike no other, for those who are unfamiliar with it. So, I said, look, Tommy, here's what you're going to do you're going to, no, I'm just kidding. I basically begged the dude for a job because it's such a cool company. We got like eight hours of programming every day, Monday to Friday, just, you know, great, great people with so much knowledge from the industry. Several shows, tons of different content on options trading and talking to people about break evens and the best way to manage, you know, there you know, self-directed portfolio. But more importantly, all of this is with side a personality. So, the aim of eventually is just, you know, to help people understand the esoteric nature of options and futures with easy-to-follow trading mechanics in a non-intimidating way.

And some of those concepts, that make us different and separate us are, you know, trade small, trade often. We're largely talking to people about how to sell premium and the correct way to do that. Using the law of large numbers to take advantage of multiple occurrences markets, you know, helping them understand the idea that the markets are random. So, it's pretty difficult to be directional and I certainly have spent plenty of years of my trading career at a prop firm, you know, times when we were directional with the movement and the stock. Or whether we were directional with volatility. But it's, we're just trying to help people understand it's hard to be directional. So, you want to try and be product and different when you're selling volatility and you want to avoid [unclear 05:37] liquid underlying’s.

You want to trade those monthly expirations as opposed to weeklies, again, getting to this idea of liquidity, trading liquid options and stocks where you can get in and out relatively easily and seamlessly. You want to try and manage trades, especially those that are winning trades close out the trade if you're winning from them. I mean, that's a huge win if you can do things like that, and then finally, like managing trades mechanically, as opposed to emotionally, right. When something's going against you, trying to find ways to manage that mechanically and using research that we have that shows different ways to manage those types of trades. So, you know, just things like that. And we also have, you know, a volatility rank that we use across time periods. So, across a year's period to check and see if volatility is elevated or cheap, that's our ID ranked model for that.

And, you know, we use guidelines to help determine those optimal times to allocate capital based on overall market volatility environment. So, for example, like if the VIX is anywhere between 15 and 20, then you're probably like 30% in with your capital allocation, as opposed to all the way in, cause you want to wait for better opportunities when volatility is higher. And so, you use like the fixed for that type of thing. So, I'd say that's what makes us different.

Patrick: Yeah. I mean, from a far, you guys are one of the most hardworking, you know, units in the industry with the content that you put out it's unique, like you said, it's personality driven, but then again, you guys have your own metrics and your own scorecards really that sets you apart. So, I mean, everything you guys do, I try to gobble it up as quickly as possible. So, I mean it's, when we found out that you had joined there, I think Katie and I had said like, wow, that's, you know, like a match made in heaven. So, it's great to see, you know, you guys putting out just outstanding content. But I do want to pivot back into September and jump right in. We talked about COVID's impact on oil, restaurants, retail, and real estate. We hit everything eight months later, how are those sectors Ferring? And then ahead of, what's looking like to be an amazing summer for reopening, what do you have your eye on going forward?

Jermal Chandler: Yeah, you're right. It's looking like an amazing summer for reopening, for sure. I mean you know, well, you know, honestly, it does feel like you said, you know, you talk about time now and it's so weird. We talk about like last year, or you talk about something that happened two years ago, you often have to realize, no, that actually happened three years ago. But in our case, speaking of September, you know, oddly enough, I'll let you in on a little secret. I did our show last September; just days after me and family had COVID in the house. So that was kind of wild.

Patrick: Wow.

Jermal Chandler: Yeah, it was kind of rough. It hit me the hardest everybody else was kind of okay. My kids and my wife were, you know, kind of had mild symptoms, but it hit me the hardest. So that was interesting, but you know, a lot changed since then, like you said, I mean, we're all fully vaccinated now, so that's kind of nice, but yeah, I mean, a whole lot has changed. I mean, in September 2020 COVID cases were rising, including mine. We had, you know, equity markets, particularly the NASDAQ and volatility rising at the same time, which is typically a sign of a near turn top. And it was, we saw that big move down, like after like September 2nd, I think it was last year, so things were crazy right.

Today, honestly, I haven't focused on the traditional sectors as much I mean, the sectors were a big deal at that time due to the anticipated sector rotation that we usually see around elections. And we saw big sector rotation, like in November and December and January now I'm watching data and signals that kind of determined their effects on the overall market volatility. So, like right now we've got this red-hot housing market, right. You know, new home sales cooled a little bit in April, but the housing market is crazy. I'm sure you've noticed that. And it's hard not to notice commodities, my goodness. I mean, there's been a surge in demand for all out-lot ton of materials. That's basically in some cases led to shortages. I mean, we got copper, that's trading over 10 and we got iron or, we got corn, wheat, soybeans, coffee, and lumber.

Patrick: Lumber.

Jermal Chandler: You're right; you're like right on with me like lumber oh my goodness. Which of course is bleeding into the housing market, right? Like, I mean, I saw something the other day two by four in Wisconsin. I mean, they're selling them for like $12 and they used to be like a buck. I mean, if that doesn't get to the word, we're going to get to in a second, I don't know what does, but you know, semiconductors, which is bleeding into the auto sector because of all the semiconductors they use with cars and whatnot, plastic and cardboard packaging.

So, like every commodity is just on full tilt right now. We see travel demand return in a big way. I mean, how about this for TSA numbers? Like for this month already, for average, for 2021, we have one and a half million people screening through TSA versus 200,000 for the same time last year versus 2.4 million for 2019. So, we're not quite at 2019 numbers yet, but we're way above where we were a year ago. And we're seeing restaurant capacity increases; oil consumption is back, man. I mean, oil, we know what happened with oil last year. And so, we see oil now trading back in the 60 plus range. So much of this of course is due to the high rate of vaccinations. And of course, it's leading back into I-N-F-L-A-T-I-O-N, inflation. So yeah, I mean, that's basically what I'm watching more than anything.

Patrick: Where you nervous you were going to spell that right there?

Jermal Chandler: I was a little bit nervous. I was, you know, I had to check, I had dictionary.com right next to me just to make sure. But yeah, I was doing a little Aaron Rogers thing right there. You know what I'm saying? R E L A X.

Patrick: Well, I mean, should we relax about inflation? This is deviating a little bit from what we want to talk about, but what do you got for me there?

Jermal Chandler: I mean, you know, they keep saying it's transitory right?

Patrick: Yes, that's what Clarita said yesterday.

Jermal Chandler: Yeah, right. And I mean, we, there's been a ton of jokes about that. I'm a huge swear to God I'm on Twitter quite a bit. And people are showing all kinds of charts with, you know, things busing out through the top of those charts and saying, don't worry, it's transitory. And you know, to some degree, I mean, you would think it's true, right? I mean, everything was certainly transitory last year when we went into lockdown mode, and everybody was hoarding things that was a transitory thing. You would imagine there's going to be a rush to everything; everything's going to be happening at once. Everybody, I mean, I don't know about you, but how many, you know, peer gatherings are you starting to get invited to? Are you starting to hear about things, everybody's doing something? So, I feel like I'm going to be different and say, yeah, I do think it's kind of transitory. I don't know how long the transition will be. And I think that's the key, right. But I think it's transitory.

Patrick: I've had, this May has been incredible with the amount of linkups I've had with people because we have group texts going around. Like you get your second shot, you get your second shot you two weeks after boom. Okay let's all go. And that's a, that's not just limited to my own social circle that is widespread.

Jermal Chandler: I would agree.

Patrick: And so, I mentioned Clarita's remarks I do want to run back to or stay with the fed for just a quick second. The asset purchases are continuing, you know, how long do you think that can last before some tapering begins? You know, we briefly touched on that, but I want to come back to it.

Jermal Chandler: Yeah. I mean, the fed continues to like purchase securities that, you know, to the tune of 120 billion a month, I think those questions were already mounting about tapering. After we saw these moves and commodities, we talked about a little while ago, and then, you know, we saw the recent fed minutes where they kind of touched on that idea. And so that chorus continues to get louder however, I don't think it's going to happen until late 2022 or 2023, according to the fed funds futures right now. And according to that CME fed watch tool, which goes out to December of this year. And there's no blip inside going above a quarter on the rates. So, but, you know, then you wonder, well, why? Well, I mean, the fed continues to say that they want to see metrics of better employment. I mean, even though we have falling jobs, weekly job as plains, and we've seen encouraging non-farm payroll reports each month, Although, I think we kind of drop the ball a little bit for April, but those numbers have been encouraging.

However, there's a ton of jobs and no workers. I mean, some places are literally doing paid incentives for interviews, so something doesn't add up there, right. And I did see data recently pointing to the fact that while high income and middle-income jobs have return, low-income jobs have not. So, there's still some of this, you know, the pandemic created inequality and a lot of different businesses and a lot of different sectors everywhere. And I think we're still seeing some inequality amongst the jobs. And I think until we get a handle on the job situation, there's not going to be a taper.

Patrick: And that explains why you see the CME watches projections, basically not budging because that's not something that can be fixed in a flash bang situation. That's going to take long sustained, that's going to take a sustained amount of time to fix it can't just happen at once. There can't be some bill sign that fixes everything.

Jermal Chandler: Yeah, agreed. I mean, I think it, you know, it's going to be, I think we saw the big moves for jobs and, you know, in feb and March and, you know, it slowed down a little bit in April. I think we're going to start to see a little bit gradually now. And over time as, as, you know, comfortability takes place, and then things start to return to normal, which they seem to be doing rapidly at some point, hopefully we reach an equilibrium. And you know, I mean, traders are traders. So, at some point we're going to see some moves and what people are expecting for rates. But it would seem as if right now it's like, you know, late 2022 or early 2023.

Patrick: Right. And you talk about being on Twitter a ton. I keep waiting for the Brooks Capco, Bryson Daisha and Bo meme to pop up with the fed.

Jermal Chandler: I love that one, by the way.

Patrick: I keep waiting, someone has to do it. If no one's going to do it, it might as well be you or me. Because it's begging you know, the Fed's inflation stuff is begging for the Brooks meme. But I do want to pivot at least a little bit slightly, you know, I still want to talk volatility, but we, talked a lot about how it pertains to the SPX back in September. And then we've had the most recent spikes in volatility a couple of weeks ago. How can retail options traders take advantage of these spikes?

Jermal Chandler: Well yes, I mentioned, you know, we're largely premium sellers at Tasty. So, I mean, honestly, the ebb and flow of volatility this year has been good. I mean, last year VIX was persistently stuck in the thirties I've been coming off, you know, those crazy highs of 70 and 80 plus, right. And then it makes a hard trading environment. I mean, especially after that recency bias of going to 70, everybody was expecting another big move to 50, 60, or something like that. And then we have the deal of the election, of course, too like elections. I mean, there was just volatility was persistently high. This year we've seen volatility, or I should say just the VIX for example, at 30. And we've seen it as low as like 14, 15, all within the first five months of the year. So, for me, I'd say that makes a great trading environment, allows people to sell some volatility and allows you to close out, you know, some trades if they work or not and move onto the next thing, because vol is not so expansive that you can't, you know, reach across a bid-ask spreads for options.
So, I think that's been pretty decent, but you have to exercise some caution for this year because we got some new beasts out there, Patrick. I mean I'm sure you've heard of them and a lot of them are, sometimes they're just you know, letters like NFTs and SDAC, right? I mean, those are some interesting new beasts that are affecting volatility in interesting ways.

Patrick: Let me go get my, let me go get some Excedrin for the migraine that those words cause me right now.

Jermal Chandler: Yeah. I mean, it's nuts. You know, those who knows when the, who's going to be the first company to, a public company of incorporating NFTs into their balance sheet or something somehow. But when they do, you can imagine that's going to affect volatility because nobody knows how to value it yet. So, you know, SPAC is, I keep saying like, you don't necessarily know the difference between, once they go public it's hard to tell if a company was a SPAC that went public or not because of the chart doesn't fundamentally change a whole lot, right. So, it's hard to tell of course we have the main stocks, which are actually going pretty nuts today. And of course, I'm talking about GME, GameStop, we're talking about AMC. You know, another one I look at ii it doesn't have options is costs, but I mean, there's a whole bunch of them.

We know the list. So, you know, talking about meme stocks NFT's, SPACs fundamentally, we've seen volatility changed a good bit. And if you don't think they've affected volatility, I mean, just line up a GME chart with Vicks on the same chart and look back at February, March, and you'll see they were moving in tandem, so it's, crazy. And not to mention crypto's, I mean, you know, that's a big craze right now. So how does volatility, you know, how does that factor in the volatility, particularly when you're talking about one of the largest companies by market cap in the S and P 500 and Tesla that's in a trial with Bitcoin, right. So, these are interesting times. Yeah.

Patrick: Yeah, I think in September, was, you know, Bitcoin was on, was there, it was lurking, but the explosion in the past six months like you said, I think it coincides with a lot of the volatility we've been seeing. I don't know how to put a finger on it. Is there some kind of like credo or something that you can offer to a retail trader that looks all this and is just somewhat overwhelmed by everything that they're seeing?

Jermal Chandler: Well, you know, I think back to you know, across my career, I think back to times where we had, you know, things that seemed, I mean, this is interesting because these things are so like brand new, realistically, like within the last couple of years, I mean, NFT's are really fairly new. Specs have been around for a long time, or at least the idea of specs, but the amount of specs that were brought to the market in the first three months of the year was insane. You know, obviously Bitcoin has been around, I would say as far as from the training standpoint, it's been a huge thing for the past, you know, what four years or so. So, it's not quite so much new, but I think back to a time where, you know, certain sectors were just sort of really captivating the market.

When I think about rare earth metals, I remember that was a big deal in like 2010 and those names, you know any name that was connected to rare earth metals were trading at really high multiples, really high valuations. The options markets were, you know, absolutely nuts. And I guess my point is, we'll see these types of things every now and again, this does seem to be you know, I really don't know where this one's going to go, because these are more than just stocks. They're integrated into the fabric of our culture. I mean, when you see, you know something like Saturday night live have skits on NFTs and cryptos, that's telling you something. So, I don't, know exactly what it's telling you, but it's telling me something.

Patrick: Yeah. I, to me, and I don't want anyone to take this as advice, but that just seems like it's jumped the shark. If you know, SNL is making jokes about it. If like you said, it's become ingrained in the fabric of our culture shouldn't that give some people some pause?

Jermal Chandler: Yeah, I think so to some degree, I think you have to exercise some caution. And so, you know, in general, when we're, you know, at a Tasty, we try to be, we aim to be product in different, right? Like as far as when, and what I mean by that is, you know, Boeing is for example, say Boeing is making a ton of new planes and I'm interested in, you know, Boeing because of that. That's not necessarily a tasty type of deal. The idea is, oh, I'm looking at Boeing and their IV rank is relatively high compared to the past year. So, I'm interested in selling an iron condor. That's more of the tasty way so; we try to be product indifferent. We don't necessarily focus on the big stories and the narratives. I still pay attention to them because I just like to, that's just my training, but I guess it helps to have that type of training and helps to pay attention to something and maybe give an idea of what you just said. Maybe something's jumped the shark. So, I don't want to go full tilt into, you know, a new asset class in investing. I want to be a little more careful and exercise a little bit more caution. I think that's the real key there.

Patrick: Yeah, very well said. And over at Schaeffer's, you know, our expectational analysis is contrarian based. So that's why all, I see all this euphoria and all this infatuation with these things, and you wonder like, okay, how much contrarianism can you apply to this while still taking a flyer on it? And I think that's kind of the tight rope that retail investors have to balance.

Jermal Chandler: Yeah, I would agree. And you have to, you know, I something up, but like use the correct strategy and if it doesn't fit, then you know, don't force it. I mean, you know, to get away from these big things NFTs and all this type of stuff craze for a second to give an example you know, Biogen, ticker, B- I- B currently, right now, if you look at it, volatility is sky high. And I looked yesterday, looked at the options market, volatility is trading like 110, which is pretty elevated from the normal, like 60 vols or something like that. I mean, it is a biotech, but something is coming out and just because the volatility is high, probably not necessarily a sell cause from what I saw, there is some type of a news on an Alzheimer's drug they got coming out in June. I think it's June 7th, if you look at the volatility you can tell the weekly, June 11 options are sky high and all the stuff after that is the options are pretty high. And so just, just because it's high doesn't necessarily mean you sell, you still have to exercise caution. And I think that's the kind of caution you have to exercise with these new asset classes. You got to be a little careful.

Patrick: Right, very well said. And that's Tasty putting in the sweat equity and putting the numbers behind all of the fads that you see. And I think that is so important and it does get lost a lot of times in the narrative.

Jermal Chandler: Yeah, I mean, we have that same type of contrarianism as you guys over at Schaeffer's, but like you said, we, you know, there's times where you exercise caution, there's times to be smart, just like I said earlier. I mean, you know, when we look at the situations, when the VIX is between 15 and 20, you know, we only want to be 30% in, if the VIX goes to 40, then, you know, the odds are better on your size and volatility is going to mean revert. So, we definitely think that way.

Patrick: Well, to start to wrap up here, I always want to hear what you guys have going on. So, what's new and exciting over at Tasty that you guys are working on?

Jermal Chandler: Dude, what aren't we working on is the better question? I mean, there's so much stuff going on. I, you know, I only know very little where I've had contact mostly electronically through and a few people in person. But you know, well, first of all, we're finishing up a combination with IG group which was big news back in January. IG group is based in the UK and IG is acquiring Tasty Trade. And so, the aim is to take Tasty Trade global you know the CEO team people way above my pay grade you know, I had some great talks with the IG group and you know, we found a combination, so IG is inquiring Tasty. So that's going to be awesome. I mean, I don't know if people across the pond want to see this face, but they better get ready.

I mean, they'd probably rather see, you know, some of the other people cool people on our show the Liz and Jenny's and you know, Nick Battista and Mike Butler and Katie McGarrigle and my buddies Pete Mulmat and Frank Kaberna. I mean, those are some, you know, the great people that do some of the programming on a Dr. Jim. So, we got some great people, so that's going to be awesome to take this kind of thing global, but I also understand we might be moving to 12 hours of content per day on the Tasty network so that would be awesome.

Yeah. Yeah, I think we're going to be up in the a and e, so, that'd be cool. We also, you know, there's, we also have a couple of sister companies. I'm not sure if you're aware, but you know, Tasty's got this cool looking conglomerate of companies and some startups, man. So, like some of our sister companies are tasty works, which is the brokerage, so again, Tasty Trade is the financial network. Tasty works is the brokerage where people can execute a lot of these ideas and things that they see you know, via the network. One of the cool things about tasty works brokerage the app and the desktop platform, they have this thing called a trader page. Now you've never seen anything like this. The trader page shows you the trades that the person on their personalities execute day in and day out, you know, when they trade, and they give you reasons for why they do their trades. I mean, if that's not cool, I don't know what is my man. And I think I informed, and I understand, I think we're getting a pattern for that trader pages. There's nothing like that. You ever seen anything like that?

Patrick: That's transparency that is unparalleled.

Jermal Chandler: Absolutely. Absolutely, so that's on the taste of works brokage platform. There's also another sister company dough incorporated. It's a millennial focus brokerage you know, Victor Jones is the CEO of that company, doing some great things over there and, you know, work with them every now and again, they're just a cool, energetic bunch. So that's a great startup they got going on. And then the small exchange, which is a retail focus, futures exchange, I mean, small exchange is pretty awesome and that you can trade a lot of futures with not these huge, like margin requirements that you have at a no exchanges. So, this is pretty awesome that the small exchange exists. And again, you know, Tom and Tony and Kristi Ross and Lynne Woodmont, you know, all these smart, smart people just create these cool companies and cool things.

And all these companies provide, you know, unique ways for self-directed investors to get their market Jones on man. So, you know, for me and myself currently, I'm on helping out on two segments. If I'm lucky, I'll be able to work my way up to more, but right now I'm doing one segment in conjunction with a small exchange called the Leap from options to futures. It's where some, myself who's a seasoned options trader who, and this is real. I had never traded a futures contract in my own personal account. I've done it on a firm level. I mean, but that's easy, you click and buy, you know, click the button with somebody else's money as a whole lot easier in doing it with your own money. So, we came up with this concept for a show and it's been great.

I work with Pete Mulmat and Frank Kaberna at the small exchange. We do a show every Tuesday and Thursday. It's a lot of fun and I'm getting to learn, and I just traded my first futures contract two weeks ago, traded a dollar, a small futures exchange, dollar contract. So that's been cool and then every Friday I team up with Tom Sosnoff and Tony Battista to do an options jive segment, where I talked to them and try and challenge them a little bit. I mean, they know it all, they've been in the business for 40 years, but I try to challenge them every week. So, I love being there and it's a great company.

Patrick: Yeah. I mean, first of all, you're going to have to send me that link so I can put that in for our listeners to check out because that sounds incredibly exciting. And as far as the European stuff, Hey, I'm a soccer guy. So, if you need any help, you know, speaking their language over there, I got you.

Jermal Chandler: No doubt, no doubt. And as long as we don't create any new super soccer teams, I mean, I think everything should be okay, right For the most part?

Patrick: Yeah, anytime you're dealing with someone global, just say, super league bad, that's all you have to say. And you're in like Flynn.

Jermal Chandler: Yeah. You know, I love watching soccer, great game. I don't necessarily have any dog in the fight. I don't have a team. But if you can convince me with a team, man, I'll ride with you.

Patrick: No, actually I don't have a team either. Just be a fan, that's all you need to do, and they'll embrace you for it.

Jermal Chandler: True, true. I like it.

Patrick: Jermal, I appreciate you coming on. I mean, it was great chatting with you. What would you say every eight months we do this maybe even a little less time in between because you know; your insight is just so valuable? I think, to the retail trader and especially if they're looking to get into options check him out, Tasty Trade.com. I'll be sure to put up all the links because you know; I got to support you guys. I love what you're doing over there.

Jermal Chandler: Thanks, Patrick. We really appreciate you, really appreciate everybody at Schaeffers. Love talking to you guys and yeah, man you know, probably sooner than eight months, let's get this back on wax again at some point soon.

Today will bring existing home sales, as well as an update from Federal Reserve Chairman Jerome Powell. There is also a short earnings report list to keep an eye on.

The following companies are slated to release quarterly earnings today, June 22:

Cognyte Software Ltd. (NASDAQ:CGNT -- $23.74) provides security analytics software to governments and enterprises worldwide. Cognyte Software will report its Q1 earnings of 2021 before the bell today.

Korn/Ferry (NYSE:KFY -- $65.12) provides organizational consulting services worldwide. Korn/Ferry will report its Q1 earnings of 2021 before the bell today.

Plug Power Inc. (NASDAQ:PLUG -- $29.85) provides hydrogen fuel cell turnkey solutions for the electric mobility and stationary power markets in North America and Europe. Plug Power will report its Q1 earnings of 2021 before the bell today.

Here is a quick look at how yesterday's earnings results played out:

Luminex Corp. (NASDAQ:LMNX -- $36.79) develops, manufactures and markets proprietary biological testing technologies and products with applications throughout the life sciences and diagnostics industries. Luminex reported $0.19 earnings per share for the quarter, beating the consensus estimate of $0.15 by $0.04. The firm earned $110.69 million during the quarter, compared to analyst estimates of $110.11 million.

Looking ahead to tomorrow, Wednesday has new home sales data, Markit manufacturing PMI, and Markit services PMI all slated for release.  All economic dates listed here are tentative and subject to change.

Blue chip semiconductor name Intel Corporation (NASDAQ:INTC) is brushing off a price-target cut from Citigroup to $60 from $65 this afternoon. The brokerage firm noted component shortages are leading to PC supply chain push-outs, adding it "remains concerned there has been excess inventory built and/or lower demand forecast." In response, the analyst in question also lowered revenue and earnings for INTC, while predicting downside risks for the rest of the chip industry. At last check, Intel stock remains up 0.5% at $55.92.

Despite Citigroup's grim outlook, Intel stock just made an appearance on Schaeffer's Senior Quantitative Analyst Rocky White's list of stocks that have attracted the highest weekly options volume within the last two weeks, with new names highlighted in yellow. More specifically, 374,178 weekly calls and 79,719 weekly puts have been exchanged during this time, a heavy call bias that's worth a second look.

Digging deeper, is a ways off its April 12, annual high of $68.49. The shares gapped lower to the $54 level late April thanks to headwinds stemming from the well-publicized semiconductor shortage. Since then,  INTC has been struggling with overhead pressure at the $58 mark, which coincides with its 50-day moving average. Over the last six months, however, the equity has added 20.6%.

Analysts are overwhelmingly bearish towards Intel stock, with 19 of the 27 in coverage carrying a tepid "hold" or worse rating, while the remaining eight say "buy" or better. Meanwhile, the 12-month consensus target price of $64.72 is a 15.8% premium to current levels, indicating more price-target/cuts or downgrades could be coming.

Now seems like a good opportunity to weigh in INTC's next move, per its Schaeffer's Volatility Index (SVI) of 26%, which stands in the 20th percentile of readings from the past year. This implies that options players are currently pricing in relatively low volatility expectations. Furthermore, the security's Schaeffer's Volatility Scorecard (SVS) sits at at 82 out of 100, meaning Intel stock has exceeded option traders' volatility expectations during the last 12 months.

The shares of Activision Blizzard Inc (NASDAQ:ATVI) are up 1.1% at $92.45 at last check. Longer term, the shares are still struggling to overcome a ceiling at the $100 level, despite the equity making a home above that region in February, culminating in a Feb. 16 all-time high of $104.53, before pulling back. ATVI is on track to snap a four-day losing streak, and could finally break above its 2021 breakeven mark, should today's positive price action hold. What's more, the equity recently pulled back to a historically bullish trendline that could help push the shares back toward record high territory. 

Specifically, Activision Blizzard stock just came within one standard deviation of its 160-day moving average, after spending considerable time above the trendline. Four similar signals have occurred during the past three years, per data from Schaeffer's Senior Quantitative Analyst Rocky White. ATVI enjoyed positive returns one month after each signal, averaging an 8.8% gain. A similar move from its current perch would put the equity above the $100 region once again.

The brokerage bunch is already majorly optimistic toward the gaming name. Currently, 15 analysts carry a "strong buy" rating, with another two recommending "buy." Meanwhile, just two say "hold," and there's not a "sell" to be seen. Plus, the 12-month consensus price target of $116.41 is a healthy 25.9% premium to current levels. 

That optimism is being echoed in the options pits, where calls have been favored over the last two weeks. This is per Activision Blizzard stock's 10-day call/put volume ratio of 5.93 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio stands higher than 84% of annual readings, suggesting a stronger preference for calls. 

And speculating on ATVI's next move with options could be the most affordable move. The stock's Schaeffer's Volatility Index (SVI) of 24% stands higher than just 6% of readings in its annual range, implying that options players are pricing in relatively low volatility expectations at the moment -- a boon for premium buyers.

Some of the most profitable and productive trading is accomplished through selling options for income. You can make money on the way up and on the way down, in any market. By selling options, you control all aspects of your capital, including risk outcomes on particular trades. However, it's critical to understand the amount of money you want to spend and as well as timing the best execution or liquidation of the contract.

When it comes to options, things are much different than stocks, ETFs, and dividends. When selling options, you have a contract that you can sell to other traders for more than you originally spent on it. Whether you are new to this trading class or a seasoned veteran, it is essential to understand the pros and cons listed below before.

Pros of selling options for income

There are definitely benefits when it comes to selling options. As a trader, you have the potential to stack a lot of money. Here are a few highlights we want to cover.

You can create a steady and consistent revenue stream using options selling.

In the past few years, there has been a noted explosion of retail traders in the market. Unfortunately, these traders don't often struggle at first and these options buyers and are trying to find value more immediately, often trading with emotions. Trading requires risk, including possible losses, but understanding, researching, and studying require time and years of experience can combat some of the risk.

Option sellers can take advantage of this phenomenon in the pricing model used by stock exchanges. Option prices are set by the exchange using "bid" and a "call" prices which essentially tell traders how much the option may be worth at any given time.

As a result, option sellers have little reason to overreact to news or rumors about specific assets. Instead, with an understanding of the market and technical analysis, selling options for income creates consistent returns while also protecting your larger trades.

You can capitalize on the idea that volatility and complexity are typically overstated.

It is essential to understand: unlike futures contracts, options do not provide any information about the future performance of an asset. Therefore, there is no true way for traders to know how much an option may be worth at any given time in the future.

Trading options is more than simply buying and selling a stock or commodity. It involves a lot of psychology – both about the market, other traders in the market, and yourself. Unfortunately, there's a lot of information floating around about the best platform for research, exchanges, and more. So, you wind up doing more reading about how to become a successful trader than actually becoming a successful trader.

However, analyzing options and knowing how to price them accordingly can be some of the most critical skills for option sellers. Understanding the potential downside of an option can help determine its fair value. And, knowing when to sell a position for the best possible gain can get you (and keep you) in the green. One of the best ways to understand the risk and reward of an option is to look at how the price has changed over time.

While SPY options can be extremely risky, understanding how SPY options are priced can help option sellers determine if the market overall is gaining or losing value with every day that passes.

You can cover trades and use options to always stay ahead.

If you get into trading because you enjoy learning about markets and saving money, you probably don't need much convincing. But, some people are attracted to the idea of trading purely for enjoyment and the chasing of fortune (almost like professional gambling).

So, while it's certainly possible to earn a livable wage using trades, those so focused on making money fast also need some education on the defensive side of trading.

You learn how to read and interpret evasive, confusing signals, and you have to learn how to position yourself effectively in markets. Selling call and put options at the right time and in combination with market signs can transform your portfolio.

Unfortunately, selling options also a strategy that most options traders ignore. A better understanding of how markets work, how your personal biases affect trading decisions, and how to limit those negative influences on your trading can take you a long way in becoming a successful trader. Trading options can truly allow you to take control of your financial future.

Cons of selling options for income

There are, of course, also drawbacks when it comes to selling options. To earn money selling options, you must dedicate a substantial amount of time and money, which can be difficult if you do not have much trading experience.

It takes more time to research and utilize options selling.

There is a big difference between scalping and selling options. Scalping is taking a risk, understanding the size of the position and the potential reward or loss. Of course, this is a generalization, but overall this is short-term trading strategies.

The truth is that most people trading on a trend and following strategies related to selling options for-profit experience losses. That does not mean they are useless. However, it only means that they are less effective at generating long-term and significant single-trade profits.

It is nearly impossible to truly predict the future of the stock market.

Many systems try to predict upcoming movement based on past stock price trends. A significant advantage of this approach is that it's simple and can be implemented by anyone. This allows strategies to be deployed in many different market environments, including equity markets, commodity markets, real estate markets, and so on. However, even with the keenest log or understanding of the market, it is impossible to predict the future. 

Why? The market is also affected by world news, outside factors, and environmental catastrophes. For example, look at COVID-19; the market experienced extreme lows and all-time highs over a year and a half.  

If your options strategy is not set up to understand and compensate for these situations, you stand to lose quite a bit of money or getting involved in very challenging trades. With options selling, you have capped your upside potential in a trade but still left yourself significantly exposed with downside risk.

Just selling options will not take you "to the moon."

If you are selling options with a high strike, a good strike is worth 5% of the premium you paid for them. So, if you sold a call at $7 and got paid $10, you would be able to pocket 10% of the premium for selling the call for $7. Often, it isn't this simple.

You might have trouble imagining what your strike price would be without considering surrounding factors such as demand, the spread, and fees. You can increase your odds by discovering which options are highly rated by other traders. Knowing what others were willing to pay increases the odds that you will be sold the correct option at an attractive price. That said, not all options are created equal; pay attention to the expiry date, spread, and fees. Selling the best option gives a solid reward, and placing the wrong order can be destructive.

Singles Score Runs

The process of selling options does not elicit the same level of excitement as options buying, nor will it always be a "home run" strategy. Think about it like this: options selling is more akin to hitting single after single. Just remember, enough singles will still get you around the bases, and the score counts the same. Take time to understand the process of selling options. Options selling can bring additional stability and consistency to your options portfolio.

Uber Technologies Inc (NYSE:UBER) is down 2.7% at $48.36 this morning, following news that the rideshare company entered deal to acquire the remaining shares of grocery delivery name Cornershop. Uber took a major stake in the company in the third-quarter of 2020. Uber is set to acquire 47% interest in exchange for 29 million shares of its stock, with the transaction expected to be completed next month. 

On the charts, Uber stock has taken a 24% haircut since its Feb. 11 record high of $64.05. The $48 level has emerged as an area of consolidation, while the shares' descending 40-day moving average has rejected recent rally attempts, a trendline that has also served ceiling in late April.  

Despite the middling price action, analysts are optimistic on UBER. Of the 27 in coverage, 24 call it a "buy" or better. Plus, the 12-month consensus price target of $68.64 is a 38.1% premium to current levels. 

Short interest has been on the rise though, adding 19.5% in the last two reporting periods. The 73.24 million shares sold short make up 4.9% of  the stock's available float, and would take nearly four days to cover at its average daily pace of  trading. 

Now looks like an ideal time to speculate on UBER with options. This is per the security's Schaeffer's Volatility Index (SVI) of 39%, which stands higher than just 3% of readings from the past year. This means options traders have been pricing in extremely low volatility expectations for Uber stock right now.