- 2 years ago
Scott Redler, Chief Strategic Officer of T3 Live and T3 Trading Group.
Watch the full segment with Scott on BenzingaTV on YouTube.
Watch the full segment with Scott on BenzingaTV on YouTube.
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NewsTranscript
00:00 Scott, let's get to the state of the markets. I was not here last week when you came on and I was
00:05 told that you were bullish leading into the CPI report. We've had a nice move. We had a little
00:10 bit of consolidation and now just another move higher, five-day winning streak. Give us the
00:16 state of the rally in your opinion. Well, this rally has been going on now for almost three to
00:22 four weeks. It's funny how last week when I was on, the networks are finally like, "Is this for
00:27 real? Are we going higher?" It's like, "Well, we've just been going higher for two, three weeks.
00:31 You should say, 'Can this continue?' How do you responsibly approach it? How do you stay in it
00:35 with a risk-defined way where you're able to keep your swing trades, use your tier size,
00:41 and if you're going to put hedges on, don't do it too fast and don't let it take too much money
00:45 away?" That's what it felt like yesterday. For me yesterday, I've been massaging six, seven longs,
00:50 trying to rotate through them, stay involved. Some have been the mega cap tech names that if
00:55 you remember we were talking about last week, I was in a lot of meta. I'm still in meta. I've
01:00 been picking and choosing spots for Apple, sometimes for Microsoft. And we also, like you
01:06 said before, I got pretty heavy into some IWM calls for the CPI. And that's also giving you ways to
01:13 buy dips and trade around it. But as of yesterday, the oscillator hit plus 57, which makes it really
01:19 hard for new buys, but it didn't make it seem like things were just short. So you're at that point in
01:25 the rally where it's a little bit of a pain type trade where you think about all the positions you
01:30 had a week and a half ago and how much money you'd have in your P&L if you just closed your eyes or
01:34 someone stole you. And then you'll also maybe try and hedge because you hear about all these people
01:40 short and about the recession next year and you lose there. So you're at a point where it's like,
01:45 just pick little spots, net a little bit of money, stay with the trade, try and stay in rhythm. I
01:50 talk about a rhythm. For a trader, you need to be in a rhythm with the market. You need to kind of
01:54 have your feel going. And it's very easy to be knocked off your rhythm where you get short too
01:59 early, you sell too early, then you're doing the revenge game. And then all of a sudden you miss a
02:03 few days and you become really upset. And the last thing you want to do is be upset before Turkey
02:07 Day. Turkey Day is coming up. Yeah. Yeah. So let's move on. I mean, with talking about your positions
02:14 here, so you parcel out, right? You have targets and you try and hold that little piece, but talk
02:19 about like your transition. I know as long as you've been in the market, you played both sides
02:24 of the market. I mean, right. I mean, market goes up, it goes down here. So just talk about that
02:31 transition and what you'd be looking for. I don't know if you want to pick an individual stock or
02:35 whatever, but do you start putting hedges on before you're out of the long or do you get out
02:42 of completely in the long and then maybe start looking at the short side? Well, when we're in a
02:47 sequence I call, like we've been in for like three weeks where dips have been viable, the S&Ps above
02:53 the eight day. What I like to do is I have multiple positions. I use a tier system. And then whenever
02:57 we get overbought, I used to short the spies as a hedge versus my six, seven longs. And kind of
03:06 at points it would take too much money away because you have six, seven longs. Sometimes
03:09 one or two of your longs aren't going up that day. Another one's going up a little bit. And
03:13 then the biggest thing out there is a spy is going up. So you're losing on your hedge and you're
03:17 trying to be long responsibly, but meanwhile you're losing money because you're overly hedged.
03:22 So the way I've been doing it lately is it's not easy for everyone, but I try and short premium
03:28 higher. Like if the guess, say the spy is at 452-ish, and I'm in my positions, instead of
03:35 shorting the spies, what I'll do is I'll short the 455 calls a few days out saying, "Hey, I wouldn't
03:41 mind being short the spies at 455 if we get there. And if we don't get there, then I keep that
03:48 premium. That's my hedge. So I'm making money there. And if we do get there, that means I'm
03:53 making money in my longs along the way." So there are points of a sequence when we fill overbought.
03:58 I try and short some premium above with room, not in the money. And I don't mind getting converted
04:04 there because I've gotten caught a few times where I've gotten converted short the spies.
04:08 I've made money on my positions. And then usually you come back to that spot if you picked the spot
04:14 well, and then you could trade out of it. And meanwhile, those hedges kept you in a lot of
04:18 your longs mentally. Letting that premium, exactly. So if it stays still, like after we had that move
04:26 higher, we consolidated for four or five days. We went up a little bit, but it took it in.
04:33 Last week I double dipped. Last week, a lot of my positions were working on it. It was in a lot
04:38 of small caps. Remember I talked about being in Palatier, being in Square, being in the IWM. So
04:43 I was making money there and I shorted spy premium higher and they consolidated. So I was able to
04:48 collect premium and make money long. So it was the best of both worlds, which don't get me wrong,
04:54 that doesn't happen a lot. But every now and then, if you do it right, it works out pretty well.
05:00 Let's go looking at opportunities. There could be sector, industry wide. What are you looking
05:04 at, Scott? If you want to share your charts, feel free also, but let's get into it. What
05:09 are you seeing out there? There you go. So you see the IWM, right?
05:12 Yep. I got it out there. If you look at the IWM, if you look at that big pro gap there,
05:17 that happened on the CPI. So into that, you want to risk defiance. So what I did is I took some
05:22 options. I took the, I think the 171s and I was still in the 175s on that last pullback,
05:28 but thank goodness I gave it to this Friday, thinking that usually Thanksgiving historically
05:33 is a stronger week. So I gave it some time. So I was able to make money back on those and
05:38 buying the day before. So we hit a high of 181 there. And now I would think if the IWM is any
05:46 good and we were going to get another move into the end of the year, I would think we could hold
05:51 this 175. And if you're super active, like today, it's down about a point. What I would do is I
05:57 would probably buy a little bit more versed out 177. So in order, in my mind, I'm framing the
06:03 trade for the IWM to keep commitment to maybe get higher prices into the end of the week.
06:08 And next week we need to hold this 175 to 177 area. So that's a thought right now as I continue
06:16 to massage that trade. If you go to the SPYs, which I'm going to put the SPYs up, if you look
06:21 there, yesterday was a classic bull flag breakout where like you said, Joel, we went sideways for
06:28 a bunch of days. Then we took out 451.38 and we wound up hitting 455.12. So that could have been
06:35 a great day trade if you don't take overnights or a great add to a trade if you have swings.
06:40 And when it took out this 452, that's when I started selling the 455s thinking that we're
06:45 not going to get above 459 unless Nvidia is awesome and rides higher and maybe splits,
06:51 but we'll get to that. So for today, if you think about it, you would think that right here is the
06:57 old pivot 453-ish. That's kind of where the SPYs are now. It's a little bit below.
07:02 If they want to make it easy, I think we hold 453 today, which would be pretty much half of
07:08 yesterday's candle, the top third to show strength. If it breaks below 453, it could still
07:13 probably hold this 451.38. But by that point, if you're too heavy from yesterday, you're probably
07:19 a little worried about whether or not that 455 is it. But sometimes they try and make you feel
07:25 really bad about yourself before a major event like Nvidia where they have to have you stick
07:29 to your guns versus trade around things. So I would think if the active bulls are right there,
07:34 453 holds, if we start getting below 451 and we negate the size of yesterday's candle
07:40 on this continuation pattern, then I would get a little bit more cautious.
07:44 And then as far as some setups for today outside of the sectors, because again, we've had a big
07:49 move. So you can't be in tier two or three after being pretty small in just trailers.
07:54 If you remember last week, we talked about, and we're in, remember Palatear? We were talking
08:00 about how awesome that pattern looked, about how a pro earnings gap could start a new life for a
08:06 trade. Well, I think Mitch, you love this Palatear trade and look at it now. A week later, you had a
08:13 move, a bull flag, continuation. Now I'm smaller. Now it's got to digest. I also showed you square
08:19 and you told me like, "Oh, did you see the inside of what? $24 million worth of stock."
08:23 I was like, "Oh, that's good to know." It gives me a little bit more conviction. And PS, that also
08:28 had a pro earnings gap. And then you could have sold some, bought some back and all of a sudden
08:32 hit a little bit below the 200 EMA. So I'm smaller there too. Then something I haven't
08:37 been in a while because I've been a little upset. I'm not going to get into it because people get
08:41 emotional politics. Today I'm looking at Tesla. I haven't really been that active in Tesla just
08:47 because mentally I've had a little problem with the situation, which I'm sure you guys know,
08:52 Mr. Elon. Anyway, if you look here, it's pretty tight, right? You see a nice little wedge there?
08:58 Joel, you know those wedges. It's pretty tight.
09:01 I know what you're talking about. It's not the wedge that's going to give you a wedgie. Remember
09:06 when Mark Cain said that to me on CNBC? He's like, "Oh, yeah. It is the wedge that's going
09:09 to give you a wedgie." Purple wedgie, man.
09:10 But there's some news out there, like this is for cash flow, that maybe they got a license for India
09:19 that might be a factory in two years. So that always gets some people a little excited. And
09:23 then there's raised prices in China. So if Tesla today were to get above 237-ish and stay above it,
09:30 it opens the door for 246. So this is something I'm not in, which might be a new trade for cash
09:36 flow just to show you how I approach some tactical situations, even if I'm not really
09:40 happy with some of the banter out there.
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