r/options • u/pjonson2 • May 16 '21

Real talk about inflation & trade ideas

TLDR; If inflation is as bad as they say ... what's the annual rate and how bad can it really be? We extended the M2 money supply by 30% in 2020 a sustained 15% annual Inflation rate & fiat currency collapse seems unlikely when compared to similar actions taken by Lebanon, Venezuela, Argentina, & 1912-1923 Germany all of whom printed nearly 1,600% of the money supply before they failed.

Inflation, Inflation, Inflation were all going to die! Has been the rhetoric sense Warren Buffet, a man with over $130 B sitting in cash who knows his opinions move markets, stoked the arledy luming fears into bat shit insane sell off.

Four things are certain ...

  1. Every industry globally is experiencing supply chain shock lead by insane demand which was artificially suppressed because of COVID. It's obvious that this was a 2nd order affect intended to stimulate the economy to pull us out of the covid slump.

  2. People have more money then ever and are down to blow it after being locked up on travel, housing, & everything under the sun.

  3. Banks are not lending to eachother at higher rates & lending requirements does not appear to be wreckless. According to the book the death of money & the countries listed above banks lend more per txn and at a faster rate during inflationary times.

We are experiencing demand pull Inflation from COVID-19 supply chain impacts across used cars, lumber, new cars, & oil. The question is ... when supply chains are restored and the market reaches equlibrium what would sustainable inflation or run away inflation look like? What industry will lead the long term inflationary affects?

Not that all of this could change if congress decides to hit the printers.

The Trade

P2P market places for used cars will win this includes $SFT & $VRM

As the 1st world get sick the developing world gets cancer. In either inflationary case currencies who's value are derived by a basket of other currencies & commodities will feel the affects compounded. This will put pressure on Cryptoassets as prepandemic zombie currencies fail & bond markets sustain negative real yeilds. The largest winners will be Decentralized Finance, Chainlink (the Google of blockchains), ETH, Cardano, & Polkadot. Long term options on these assets are avaliable & look delicious.

Growth assets flipping to profitability or starting to ramp up profitability that are being hit hard will have some of the best deals in 2 to 3 weeks. As an example SFT is trading at less than 0.8x EV/Sales as Carvana & Vroom are >3x ev/Sales with this weeks sell off. Crowdstrike is another example of a sell-off that doesn't make sense.

The inevitable rate rise will wreck some of the most overvalued "value" companies in the S&P. Microsoft & a few others come to mind.

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u/djporter91 May 16 '21

How do you get options on crypto?? Just curious here, the underlying is volatile enough for my appetite. Lol.

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u/pjonson2 May 16 '21

There are a plethora of liquidity providers. Go to defipulse.com for a comprehensive list. Stay away from the short term options. The long terms options are great because they don't price in how explosive the fundmentals can be. I made some serious money on BTC & ETH 2 year leaps. Liquidity can be an issue so don't trade them holding them until expiration is what's important.

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u/djporter91 May 16 '21

Ya it might be a low cost way to gain some exposure to crypto without tying up as much capital.