Mark Sebastian

He is a trader first and investor second.The stock market is at a different all time high than the highs in June and July. The market is rotating with money kind of re-allocating itself from the Great Eight into more boring names in the overall market. There is an opportunity with the big dips and some names are not as exciting as others. He questions the 50 basis point cut in the U.S. which can cause investors to wonder what's going on. The Fed will continue to keep banks updated as to anticipated actions. If you don't think inflation is under wraps, gold is an interesting investment. There is a place for it in everyone's portfolio, but not a huge position. It provides an opportunity if the market is fully valued.

He likes banks as a group and Citigroup is probably the worst performer of them. It will play catch up with JP Morgan, etc. and could be a rotation play. When rates fall the spread widens so this is good for banks.

Wait for it to settle down a bit but he is looking for it to be a $100 billion company in the longer term. There is potential for it to get back to $35. One of his rules is that companies that have high multiples have to be making money and produce an actual product.

The question was on option trades. Options are volatile. As a floor trader he didn't have preferences on buying or selling options. It depends on the market. There are times when options are incredibly expensive. There are general trends, example S&P, that can work to our advantage. A huge trend now is in options that expire today which is depressing options that expire in 7 to 10 days, so they are consistently underpriced

The question was on shorting. Generally when going short he likes to play directly in the VIX, or ETP's, etc. As a rule he likes long strangles, 7 to 10 days out, cheaper than the S&P, and then shorten. The best way to express short volatility options is though the Volatility Index itself.

He thinks it is fully valued with the growth priced in. The chip record can be cyclical and there could be a glut of GPU's, probably not next year but in 3 to 5 years.

It is OK for a long term play and pays a dividend. Everyone uses it so it is a safe investment but not very exciting. What happens if the U.S. economy slows down.

At depressed prices you could sell put options at a $60 price if looking to buy the stock below $60. In general the option market is now bigger than the stock market in the U.S. Banks go out and start buying medium and long term call options in depressed names and build their positions.

Regarding interest rates and options, higher interest rates are generally good for call options and bad for put options. Covered calls are a way to generate income. They still work in a falling interest rate environment but you take less premium on it. You have to be careful with some of the covered call ETF's

Today the strategy is to sell a put option to get in at the entry point, maybe January 2026 or June 2025, looking to sell at $150. He would buy additional out of the money puts in case of more problems with the company.

It is the best oil company in the world and pays a dividend so is good for the long term. Crude is not near its highs and could go to $80 or $85. The options are very cheap so he would be buying calls.

Falling rates will help this company since the spread will widen. Volatile since if the economy softens, delinquencies could be a problem.

It is highly volatile and has not recaptured the rally. It has been added to the S&P 500 and is splitting 10 for 1 on October 1. Generally speaking the stock price goes down after a split.

The question was on how to neutralize a short call that keeps going up. You're taking on unlimited risk especially on the upside. You can buy a couple of way out of the money upside calls. You can create a 1 by 2 call spread and can participate in the upside if the stock keeps going up. Strangles are generally for Indexes.

The question was on option strategy. For stock replacement buy in the money calls for big companies. This is less capital intense for a long position.