Dan Passarelli, CEO - Market Taker Mentoring

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You can learn a lot by watching what the professional traders are doing. I've been watching closely lately, and today is a great example of how watching what the big guys are doing, or big gals are doing for that matter, can really help guide your own trading.

I noticed that there were a few, a good handful of really big call credit spreads that traded today in some names that really took off pretty greatly back when lower interest rates were a thing. Before there was worry about interest rates coming up and rising and before they did start coming up and rising. Names like ExxonMobil, which is one of the, of course, stocks that is big in the energy complex.
That one had a call credit spread trade today, a rather aggressive one that traded in this Friday's, expiration, August 26, expiration selling the 93 calls and then buying the 95 calls. So that one, the short strike is actually in the money just a little bit, at least at this point. Also, we've seen some good action in some of the airline stocks. American Airlines had a call credit spread trade. This week's expiration selling the 14 strike and then buying the 14 and a half strike.

The 14 strike, of course, has the 50 day moving average at it. That stock blew south of just today. And then the other airline was United Airlines UAL with yet another call credit spread. Now, some other companies that benefited back when interest rates were down really low was some of the tech companies like Pinterest here, for example. Pinterest, back just in April, was up almost around 28 and is today trading around 21.

The charts a little bit skewed here because we got the 200 day moving average taking up a lot of real estate on the screen. But in Pinterest someone sold today the September 22 expiration. That was the longer term one, selling the 22 and a half calls, buying the 25 calls. So what do we make out of all this? Well, with Friday's route and today being down over 2% in the S & P 500, I think that there's a lot of fear of interest rates rising still more and the economy doing worse.

And all the good things that helped these companies back when interest rates were low are coming to roost and hurting them now. But we're options traders. We can make money whether the stock goes up or down. And the pros are betting to the downside. I hope that helps.

Before you leave, I want to point out that credit spreads are something, one of my favorite trades. And so this Thursday, I am having a webinar specifically talking about credit spreads and a new methodology that we use to find them and to trade them. And I'm really excited to share this with you all you have to do is stick around and sign up for this complimentary webinar here.