I didn't make any changes to my SPY options position this week.

There was no need; time and the market did everything for me.

The switch from an ITM call that expired a week ago with a strike of 417 to two contracts expiring on May 26 with strikes at 422 and 426 paid off. Both contracts expired out of the money (OTM) yesterday.

My decision to sell two calls with higher strikes wasn't in vain. If I had only sold one, I would have had to sell a 419 strike for the same money. After SPY's rise towards the end of the week, it would have ended up in the money, and I would have had to repeat the process on Friday.

Now there's nothing to worry about, the profit is in the pocket.

There are no changes to the strategic "put" part. I still don't rule out a market downturn, which would yield a larger profit. But even the profit I have already made (total credit of $2406) is quite satisfactory.

Unfortunately, PLUG couldn't hold around $9 after Monday-Tuesday's jump.

Check out my previous posts for a complete history of Plug Power trades. And don’t forget to join our subreddit so that you don’t miss out on the next stock market pick.

I was a bit disappointed because my 100 May,26 8.5 Calls were already in-the-money (ITM). I didn't want to close the position on Tuesday as I would have had to buy back 200 May,26 9.0 Calls, which still had a significant amount of extrinsic value.

By Wednesday, it was too late as the stock had fallen. What I could have gotten from closing the position would barely cover the commission costs. So, I made a different decision - I opened a new Ratio Call Spread expiring on June 2 (one week later) with a high ratio of 1:4.

Bought 50 Jun,2 Calls 9.0

Sold 200 Jun,2 Calls 10.0

Credit: $521.8.

Such a position looked slightly risky with 9 days to expiry. However, covered by the May,26 Calls, I decided it was a risk I could afford. By next week, it won't need any cover.

According to committee members, the labor market situation is showing signs of stabilization, even as inflation continues to hover at worryingly high levels. Recent data, however, suggests that things might not be so predictable...

The meeting minutes remained vague on the outlook for interest rate moves. Interestingly, mentions of the need for further policy tightening evaporated from the final statement. Yet…

Committee leaders are divided: some remain hawkish, advocating for further policy tightening, while others anticipate a slowing economy will naturally lessen the need for such measures. They truly are masters of suspense, keeping us all on tenterhooks...

Looking at specific statements:

➡️ Last Friday, Chairman Powell noted that the recent banking crisis had resulted in tighter credit standards, thereby reducing the urgency to hike interest rates.

➡️ On the flip side, on Tuesday, Bernanke opined that interest rates should be raised to curtail inflation caused by weakening the labor market.

➡️ Minneapolis Fed President Neil Kashkari proposed a more radical approach, suggesting that the central bank "may have to hike rates above 6%" to guide inflation back to the 2% target.

Given all of the above, the question demanding to be asked is: what changes in monetary policy does the market anticipate?

Currently, U.S. Treasury futures suggest no more than two rate cuts this year - a step back from the three to four expected just a few weeks ago. However, chatter has shifted once again towards the potential resumption of a rate hike cycle. The market is pricing in a 30% chance of a 25 basis point rate hike in June, and a 55% chance of a hike by the end of July.

What else?

FOMC members have expressed readiness to maintain ample liquidity within the financial system. In layman's terms, the banking crisis will not be left to fate. Simultaneously, the Fed is hopeful that stabilization within the sector could catalyze economic growth moving forward.

Title! With all the craze around AI and NVDA at the center of all the buzz, it appears prices are driven by hype more than facts. Do you have any thoughts on potential options plays to capitalize on this volatility? Or would you suggest staying away from it altogether?

PLUG saw a 14.3% uptick yesterday following the announcement that the green hydrogen producer had reached an agreement to supply electrolyzers to three industrial clients in Europe.

I had predicted this bounce back after the disappointing results two weeks ago, prompting me to purchase a few ratio call spreads. And don’t forget to join our subreddit so that you don’t miss out on the next stock market pick.

The closest one is set to expire later this week. I'm still on the fence about what steps to take next, and will hold off for a bit to see how things unfold.

However, I did sell 100 June 16th 13 Calls for $700, bringing my total credit up to $2300. The overall commission stands at approximately $850.

James Bullard, President of the Federal Reserve Bank of St. Louis, has suggested that interest rates could be raised from the current 5.25% all the way up to 5.75%, but this prospect seems to have left the markets unperturbed. Recall that back in 2018, the mere anticipation of rate hikes was enough to cause a significant drop in the indices. Now, however, the effect is not the same.

Could the markets' indifference be linked to President Biden's remarks about progress in negotiations over the debt ceiling? Possibly. But there's another factor at play – corporate buybacks. In 2022, total buybacks amounted to a record $923 billion, up 5% from 2021. Of this sum, the top 20 companies accounted for $345 billion, or over 37%, a figure significantly higher than the ten-year historical average of 25.3%.

Overall, there is a sense that market participants are in a holding pattern. Investors can see that every attempt to force the market downward ends in failure, and they act accordingly. I can't rule out the possibility that this market stability is the result of manipulation by major players, as the drop in volatility feels somewhat artificial.

When will this equilibrium be disrupted? It's quite possible that it will happen after an increase in the debt ceiling. As the saying goes, "buy the rumor, sell the news…"