fuzzymath,
I agree it's almost a forgone conclusion the Fed hikes, my guess is .25 with a bias to tighten more, with 2 more to follow this year.
I mainly trade options, and normally make all my profits by position trading. Right now, the only way I'm making profits is by flipping because of the volatility. In almost every issue I follow (mainly big tech), the volatility premiums in the options are very high, so the risk of sitting through any pullback is great. That's why I believe the potential options profits on techs is minimized at the moment. There are some exceptions, Microsoft looks cheap here, with earnings around the corner.
The only options I see right now without excessive volatility premiums are Banks, Pharmaceuticals. Now I'm wondering if the banks have .75 worth of hike built into them....they're already reflecting some discounting due to the bonds. This could be a sector worth watching because they're at tradable levels right now. I don't understand completely the drivers of the drug sector with regards to govt regulation, etc. That's why I'm hesitant to jump in there.
My question is how banks will react to a hike at these levels? |
