Last updated on December 13, 2022
This podcast episode brought to you by Covey — Covey is designed to find, reward, and train the next top investment managers —from any background—that anyone can copy, so everyone can win.
Michael Pisani, aka Options Mike, joins the podcast to discuss why he’s anticipating a year-end rally in stocks.
Content Highlights
- It’s been a tough year for stocks and risk assets. That may be about to change (2:10);
- Jerome Powell and the Fed have twice this year fooled markets into anticipating a pivot. But something has changed and the FOMC is no longer unanimous with its hawkishness (4:04);
- There is still a lot of cash still on the sidelines (6:46);
- Specific areas of the market Pisani likes here. And specific stocks, primarily Ford (F) and to a lesser extent General Motors (GM), both as longterm plays (11:42);
- Another stock he’s bullish on: Snowflake (SNOW) and several that are candidates to go to zero (12:33);
- An easy contrarian play: ARK Innovation ETF (ARKK). Yes, really (15:46);
- Pisani’s take on cryptos (18:31);
- Background on the guest (23:44).
More on Options Mike
- Website: SmartOptionTrading.com;
- Twitter: @OptionsMike.
Not intended as investment advice.
Video Highlights From Our YouTube Channel
Transcript
Nathaniel E. Baker
Michael Pisani, also known as Options Mike, from SmartOptionTrading.com. Thank you so much for joining the contrarian investor podcast today.
Michael Pisani
Thanks Nat, a pleasure to be on. Thanks for having me, man.
Nathaniel E. Baker
Great having you. And we’re here to talk about your contrarian take on the market as we record this after the close on Tuesday, November 29. So we’re heading into the last month of the year, it’s been a tough year for stocks and for risk assets in general, not in going to talk about cryptos. But just for stocks, it’s been tough. But your boy bullish now, going into this last month of the year, and potentially even early next year, so tell me about that.
Michael Pisani
A couple of things are going on here. And that is sentiment is extremely negative right now. And let’s not let’s be honest, there’s good reason for sentiment to be very negative, right? We are either in a recession or heading into a recession, depending upon your how you want to look at it. The war in Ukraine is dragging on, we have COVID raging in China now and supply chains under basically under pressure there again. And you have a fed that is tightening like mad into a recession that may actually cause a deeper recession. So I’m not trying to sugarcoat anything. I said there’s a lot of problems out there. But what I’m looking at short term right now is, you know, we’ve been the high of the day of the high of the year was put on the first trading day of the year, that was January 4 this year. And if you look at the spy chart, we’re coming up on that downtrend, again, where if you look at the we touched 22 other times when we’re coming into it. And to me this markets looking for a reason to rally because you have so much money sitting on the sidelines and so much negative sentiment that is looking for any good excuse to rally and you remember you have all these fund managers who get paid bonuses based upon their performance. How do you think most of these guys have done this year? Yeah, not well, they’re not well, so they’re looking to chase money. So for me, you look at the spy and it starts to get above this 40940 10 area in the next week or so. And it breaks that downtrend. You could have the chase on and you know, and that’s what we call FOMO Fear Of Missing Out type trade that can come in.
Nathaniel E. Baker
Yeah. Now, I mean, the whole the whole Powell thing, like we’ve been fooled twice already by him this and by the Fed this year, at least twice, going into Jackson Hole, obviously. And then going into this last Fed meeting both times, there were very significant hopes of a Fed pivot coming in and even we had reason to based on some of the comments that the Fed had said, and then Powell came out with that. Ron Paul, would this third time really be different? I mean, he’s been consistent with his concerns about inflation and all that stuff.
Michael Pisani
Well, something has changed in the last Fed meeting. And if you notice that the said minutes show that the Fed was not unanimous anymore on keep raising a point seven five. And the the language in the language released from the press release did not match the language Powell used in his press conference. They were extremely different if you remember, the market rallied like mad off of the initial point seven five hike and the language put in by the the Fed as a whole. And then it bombed after Powell baby came down and said, you know, no, no, no, no. So remember, he’s one vote. Now he has a lot he can push on. But he’s one vote. So we’re we’re looking to see is he backing off at all here? And you’re right, he’s been difficult. I do find it funny, though. There’s so many people out there that are crying and saying Powell has to go and he’s horrible. But when Powell saved the markets a couple of years ago and he did great. He was a hero and he saved made everybody a lot of money. So, you know, life is Life is funny.
Nathaniel E. Baker
Yeah, people don’t remember that, of course anymore. That’s ancient history by now.
Michael Pisani
But I do think though, that they are they’re become blindsided here that they cannot see beyond the what’s going on with inflation. They don’t realize that every time they raise hikes, they hiked rates, they’re hurting the average person, they’re raising their credit card debt, they’re paying more on interest on that their mortgages are getting more expensive, they have to go out and do a new mortgage. I mean, their car paid to get a new car, you know, look at the loans and cars are seven 8%. Now, they don’t realize the damage they’re doing to the average person. That’s the problem.
Nathaniel E. Baker
Yeah, but I mean, they would certainly argue that you know, price stability, right. It’s been the big mantra since Jackson Hole and that, you know, they view that as their that that’s their primary thing that and I guess full employment, which now Our full employment full employment is taking care of so you have to share price stability, right?
Michael Pisani
you know, they can’t control things like food and oil and gas, because these are we’re commodities that are world, regular by the world and world markets. So they have a limited thing they can affect and this whole idea we’re raising interest rates through the roof. And we are, we are selling off our assets at the same time, maybe pick one, instead of trying to do both at the same time.
Nathaniel E. Baker
Yeah
Michael Pisani
But that’s my thought.
Nathaniel E. Baker
So you do think there’s a lot of money still on the sidelines here?
Michael Pisani
I think they said there’s a record amount of money here on the sidelines at this point. And the and retails been selling of late, which isn’t usually another indicator to me, when retail starts to finally, throw in the bag, throw the towel, and that’s usually when the markets trying to close in on a bottom, you know, kind of look at this we we bottomed out back when was it? September, October, we bottomed out around around the 350 area. And we’ve been in a steady little slow grind up here now for for two months. You know, again, the market was trying to hold up here instead of falling apart. You know, last couple of times, we did this pop up and then we came right back down. This time we’ve come up and we’ve been going sideways now for the better part of two and a half weeks. That’s the consolidation, the markets looking for a reason to try to pop it just needs it. And it just it really just needs a good reason other than, hey, we have some weak data. And he’s the Fed to say, you know, Powell can come out and say, you know, I’m thinking we do one more point seven five rate hike, and then we go more data dependent, going into January that would that would make the market extremely happy.
Nathaniel E. Baker
Yeah, FOMO is something we have not seen since the heady days. Well, actually, it was really just a year ago, I guess. We still had some FOMO. But it’s been in a couple years since it was really out in force, but you think it can come back?
Michael Pisani
Again, it’s everybody’s gonna chase, because they’re just not underperforming this year. Right. I mean, it’s been an OK year. For me, it hasn’t been a great year. I mean, you know, I’m not the best short in the world. So I tend to miss out on something else. Sure. But I’m not as good at as some other people are. So it’s been a tough market, you have to pick your spots, you have to pick your names, you have to get in and out quickly. So everybody’s looking for a reason. If the chase comes on, it’s going to start with some big money, because there’s a lot of big funds that are sitting on the sidelines and they’re waiting. You brought up this whole crypto thing that’s kind of a little bit of a black swan event that came out of nowhere, right. I mean, that’s that’s the definition of a black swan event, it comes out of nowhere. We don’t really know the true contagion effect that that is yet but so far, the markets shrugging it off.
Nathaniel E. Baker
Yeah, yeah, I guess the flip side of this is at some point, you know, I’ve always viewed this as two sides. On the one hand, you can have a Santa Claus Rally. But on the other hand, you can have tax loss harvesting, and at the end of a bad year, sometimes people tend to throw in the towel. So you don’t think that’s a risk.
Michael Pisani
I think you’re seeing that. I think that’s been going on here for the last couple of weeks, you’re seeing a lot of tax law selling some of these names that are getting beaten up a little bit. To your point Santa Claus Rally, though starts Christmas week. So we got a little ways before we kind of get there. But we closed October positive and typically if you close positive seasonality kicks in, and we have a strong close to the year. You know, I’m just playing the odds here and the percentage looking at everything and saying, Okay, we know we’re positioned, that’s doesn’t mean it has to. And by the way, the names that have led us in the last five or six years or 10 years, this bull run may not be the names that lead us in the next Bull Run. And I know everybody loves the apples and the Amazons and the Microsoft’s and Googles and meadows of the world, but they had their runs, you know, I’m thinking that you’re looking at different types of names here that could lead the next Bull Run and there will be another Bull Run. I don’t think this is a long term bear market we’re heading into unless something else comes out of nowhere that we just don’t know. Yeah, yeah. Perfect lead in to the next question, which is where where you do think that this could and do you think that this this next Bull Run could start or already be happening now? Or I think you’re looking at a market that’s trying to bottom but not necessarily Bull Run is trying to go I think a bull run will start once we really see inflation dying off. And I think you need to see Ukrainian resolution if somehow they’re overweight or whether it’s you know, and that will probably happen until the into the spring when the both sides clash hard again, one more time because it’s winter and you don’t have a lot you know, one thing Russia learned and most most countries learn you don’t do a lot of fighting and winter it’s just a very difficult time to keep your troops alive and if they get hurt, you can give a lot less time to get them to a medic they don’t they don’t last as long but they’re certainly injured. And they’re just more difficult so I think market is gonna look for some type of resolution there whether it’s hammered out peace treaty eventually over time, or one side just finally wins that. Okay, hopefully not Russia, but you know, well,
Nathaniel E. Baker
yeah. So okay, so what but what areas of the market do you like and you mentioned all the Amazons and I guess the fang stocks. They’ve seen better days anyway, but
Michael Pisani
I’m very high on Ford. And I’m already in Ford. I’ve been long it since that early 20s. I’ve been adding a little bit over time as it comes down and I’m high on Ford and to a certain extent GM, because I think these are the two best companies to move forward into the Eevee space and really take on Tesla. While Tesla is a great company, and in no way, talking Tesla down. Ford and GM have something Tesla doesn’t have, they have a showroom, and a repair center on every blog, every and every town around this country, right? You can’t go anywhere without seeing a Ford or GM. And they’re both putting a ton of money in it. So I really like Ford, for me, it really needs to take out kind of that 1455 area, and then it can start to run, especially if the markets going. And I think they are positioning themselves to really be a big player in the Eevee space moving forward. And I liked that as a long term play. So this is not like something I’d be looking to say, hey, get in get out. I mean, you could certainly do that. But I think you know, I think give up between now and the end of the year, the market pushes 1650 and up into the 1750 areas easily doable, which first stock trading at 1375 is not a bad move. Alright, interesting. So, you know, that’s one and that’s, that’s, you know, a different one. The other one I like, and they have earnings this week, so gotta see what they are as I really like SNOW down here
Nathaniel E. Baker
SNOW. Okay.
Michael Pisani
So what I like about SNOW is — what I don’t like about SNOW is they’re hemorrhaging money, which in this market is a very bad thing, because that means you need to raise more money. And the cost of borrowing money has gotten more expensive. And that’s going to be the doom of a lot of companies. So by the way, if you think you’d like names like peloton and beyond and affirm and Carvana these companies are hemorrhaging money left and right and running out of cash, and they’re gonna have to do something to raise more money. I’d be very careful i They’re all on my list of companies potentially going to zero, or getting or somebody comes in, buys them and saves them at the last second cheap, right. But the reason I like snow is because they have a credible growth right now. And one thing that whenever you go into a bull run, or the market is always looking for and growth names as they’re looking for big growth. And that’s what Snow has, yes, they’re losing money. But they’re growing at almost a double per year. But more than that the markets looking for and and that’s just a matter of time before they start click a profitable thing can keep that up. So you know, I’m looking at it right now. And the last couple of reports have been pretty good. It’s got to take out 173. That’s a 200 day right now. But if it takes that out, it can really run. And I like that to move up and I could see this thing I know you’re gonna laugh at me, I can see this thing up in the 242 50 range by the end of the year. I mean, it was higher than that during the during 2020, wasn’t it? Yes. Much higher was up in the third I think was three 380 or something like that or three? I don’t have my chart going back far enough. But yeah, but I like it, you know, but that’s a nice little move that you can pick up on now. earnings, I think on Thursday night, so I would make sure I see what the reports see the reaction. Make sure they don’t have major, you know, you never know earnings are always a crapshoot. I always tell people that like, you never know what they’re gonna say like crowds, and I just reported their revenue was late and their guidance was worse. That’s been a darling.
Nathaniel E. Baker
Yeah, interesting. And so SNOW, you really think that can — I mean, I guess they’re still kind of early stage. Right? Is that TAM? I mean, how much have they have they tapped into that? I don’t know much about the business.
Michael Pisani
You know, they’re another cloud based or in this growth. And they can they can really just kind of grow it and push it you have a good CEO there and I can’t for the life of me at the moment. remember his name some reason I’m blanking on it. But he’s a well liked, and it’s a well liked company, I again, go do you know, I always tell you go do your own research. I’m a technical trader more than a fundamental trainer. honest answer. I don’t necessarily care what the company is, as long as I know, it’s real company. It has, you know, it has assets and stuff. I liked this one a little bit. And I liked this enough to say I would like it and go forward with it. You know, a lot of people will say, Oh, well, just another one. But yeah, this one has growth. And if you look what’s going on up there, and this is some of the things that are problem with Salesforce, which reports this week, their growth has slowed down drastically, right, Adobe, or all these all these, these cloud companies, their growth has slowed. If you’re a if you’re a manager looking for to get your number, you’re looking for stocks that can go wild, and that’s where growth comes in. So I like that one as well. So another one to take a look at.
Nathaniel E. Baker
Okay, cool. That’s some that’s some good names here for GM and SNOW. Very interesting. Anything else there any other or even sectors that you like? Well,
Michael Pisani
I’m gonna give you guys an easy contrarian play and it’s pretty my personally hate. Okay, that’s ARKK. The Ark fund from Kathy.
Nathaniel E. Baker
Oh, gosh.
Michael Pisani
Well, you know, I think Cathy’s style and investing is suspect.
Nathaniel E. Baker
Yeah
Michael Pisani
I’m gonna buy high and keep adding all the way down. I’m gonna get like mad. That said, if you don’t want a specific name, and you want to play an ETF that can go nuts because they come after growth. This would be the one to take a look at. Now, it’s got some good names in it like Tesla, like square and such. And it’s got a lot of crap in it too. Right. So you know, you got to realize that it’s got a lot of really neat names. You know, everybody loves DraftKings, but they’re Are hemorrhaging money left and right, and they need massive amounts of capital and their cost of acquisition is through the roof to get a person. And she owns a ton of that. But if they come after growth, and you can’t decide what to go well, for $34.80, you can throw some money at this ETF. And this can rally up into the 47 area towards the end of the year. Again, if they come after it. If they don’t, this one also could go quickly down and put a new one and 52 week low. And so this is a this is a much more dangerous risky play. Yeah. But it gives you broad exposure instead of having to pick the names. Yeah,
Nathaniel E. Baker
I mean, couldn’t just buy the QQQs. I mean, if that’s what you’re after?
Michael Pisani
you could but this is you’re gonna get much more growth oriented names, they really, really decide to come back because remember, what’s been driving this market this year has been energy which has gone through the roof, the pharmaceuticals, the Big Pharma, right, and these are safety names. You have industrials, like cat and deer or have been really good. So those are those are all really strong. So again, where could they go? The banks have had strong moves, healthcare has been strong for the most part. So where can they go? Growth is one of the places they can come into. So I would again, this is not my favorite play. But you asked for some contrarian play. This is a contrarian play
Nathaniel E. Baker
That’s certainly contrarian. It’s so so you do believe that Cathie has that she’s that she does have something that she is able to pick some stocks. I mean, she picked some needs. She didn’t buy high, and all of them did she?
Michael Pisani
Gosh, she bought COIN on the first day.
Nathaniel E. Baker
Well, okay.
Michael Pisani
She bought a lot of these names up high.
Nathaniel E. Baker
Yeah
Michael Pisani
I don’t know, you know, I, I just what worked for her was she was so brilliant. During the pandemic, she bought everything that was beaten, and then she didn’t change her trading style as it came out of it.
Nathaniel E. Baker
That’s right. Hasn’t she said that oil is going to become obsolete or something like that?
Michael Pisani
Yeah. And at some point, she said, cryptos going bitcoins going to 500,000 or something.
Nathaniel E. Baker
yeah. All right, before we take a break, speaking of cryptos, I mean, he did mention that, I mean, you’re probably not a crypto guy, or maybe you are but you know, what are your views on that?
Michael Pisani
I’ve been saying this forever to my members, and everybody I believe it is, it is complete speculation. If you buy if you go out and I give you $1 You know, it’s worth $1 or so based upon it’s backed by the full faith, the United States government where if you get a euro is backed by the euro or the yen, wherever you’re getting, you know, it’s backed by that government. All these cryptos currencies are backed by absolutely nothing. They’re only worth whatever any somebody at that moment in time thinks they’re worth. And you want to throw $1,000 or something into that, or a couple of 1000 for speculation, that’s fine, but I don’t understand where they’re gonna go with this and what, who’s going to want to trust them now after this FA FCX thing? FTX thing?
Nathaniel E. Baker
Yeah. Yeah. I mean, that’s the question that I’ve had also is why anybody why these haven’t collapsed completely. I mean, maybe the institutional money has been out of them since earlier, since they sit behind.
Michael Pisani
One of the bad things that happens at some fund managers do is you know, when they get into trouble and their funds are in trouble and blowing up in their leverage, instead of selling with a first their first instinct is to double down and to leverage up higher on it and that’s probably what’s going on here with some of these, these these funds and like cryptos and if it drops again, that’s when the real carnage and that will come into the market because then you’ll see margin calls in the market to cover the losses because they have to cover the losses are taking over in the Bitcoin in the crypto world. And that’s the danger you have to watch out for there. Because it hasn’t happened yet. We did the first couple of days when it came down you saw the selling in the afternoon that was margin calls that are going off across the space but it’s basically stabilized and holding around 16,000 for now so as long as it kind of holds in that range I think the markets okay but you know if you’re on manager you should be trying to unload this stuff not adding back into it a lot of people keep asking about coin I’m like you know, this thing story is going to be the high was the first day of trading of the foreigners something and everybody remembers Jim Cramer screaming I want it here I’m owning it here and you know, this thing’s trading down what the 4040 area now I mean, it’s just absolutely destroyed and I don’t see an easy out for this. They’re just there’s so much competition too. Because you can go to Fidelity now and you can buy if you really want to you can buy cryptocurrencies in your in your retirement plan or your in your portfolio there. So what do you need coin for?
Nathaniel E. Baker
Yeah, yeah. Yeah. And they charge higher commissions to them. They I mean,
Michael Pisani
That’s my understanding.
Nathaniel E. Baker
All right. Cool. All right. Well, Mike Pisani here very interesting conversation. I want to come back and ask you some more stuff. ask you a little more about your your business here. How do you do that and types of maybe some of the types of lessons that you teach your guys they are in options trading land, but let’s first take a quick break and come back. If you’re a premium subscriber, do not touch the dial. You will not get the break. And we’ll be right back. In fact, we already are.
Nathaniel E. Baker
Welcome back everybody here with Mike Pisani of SmartOptionTrading.com. Mike, this is the section of the show where our guest tells us a little bit more about himself or herself, and how he or she got started in investing their origin story, if you will, to put it into Marvel terms. So yeah, have at it, what tell us what your background is how you came into this, and how you find yourself now,
Michael Pisani
I, it was just after the financial crisis, such as taking place, and this is going back into the 2008. You know, we didn’t in the fall, and I started making my first I looked at the market and saw it crashing down. I said, I gotta, I gotta get involved in this somehow. So I started, for the first time started buying individual stocks, and I bought GM and I bought Ford and I bought, I bought a triple leveraged Fund, which I knew nothing about how it worked at that boy at that point, that was you pro, something like that, and afford a couple other names, knowing that some of them wouldn’t work. And you know, sure enough, GM went to zero, right that, that, you know, when I was buying this stuff in the low, low dollar range, these things were cheap. But the some of the stuff and I just sat there and held it, and I made a ton of money off of it. I’m like, Oh, this is easy. Of course, as easy as first time ever doing anything as simple, right? Everything’s easy. And so then I eventually got myself come back a couple years later, if somebody said, you know, you should get into options are leveraged. So I made my first couple options trade. And the first one was on Zynga. God helped me. And I made like a couple grand off and like, Oh, this is awesome. I put two grand in, I made like two grand back. And then I had like, four, I made like, 10 grand. And I’m like, I’m running along here. And I’m getting into options. And then I bought some NORTHCOM. And I remember I was watching bad money. And I think Tim Collins was on. He’s like, I really liked this stock socket. Let me go back. If I buy $10,000 with the stock, I’ll buy $10,000 Worth options. Again, I had not yet learned anything about options. I was just going blind. And I went on vacation, and I’m up in Canada. And I look at my thing today. And I’m like, Oh, they had earnings. I didn’t recognize what earnings was I had no clue what I was doing at this time. And I looked at it I’m like, oh my god, I’m up 20k. I mean it later oh my god, I’m down. 15k What the hell is going on here? I had no idea what it was. And I ended up making like 10 grand and getting out. But I had no idea at that point. That’s when I decided I really need to start learning about options, what they were and how to trade them and start diving in and took the classes and also just started reading them and just practicing with them at that point.
Nathaniel E. Baker
And so that how did that take you from? So what is smart option trading? And how does that work?
Michael Pisani
Yep. So I guess about four years ago, I started my own service. And what we do there is we run a room, I have our live trading room and we we do a trade we swing trade, whatever investing there. But what I’ve learned to do is fatwa follow the option flow during the day and you’ll see the option flow coming in like today, they were buying heavy puts on Tesla for next week and heavy puts on face metal, like still keep calling Facebook better for next week. And they were buying heavy calls on UPS T for this week. And then you know, it just kind of tells you sometimes where the money’s flowing and where you can go and where you can find momentum or where you should be taking your bets. So we use that we use news, we use events, we use technicals, you know whatever’s going on. And the goal is just to try to work and find where what’s in play that day to make money on where should we be going with it. And you know, so for me today, I added to a I started a long term options swing on Boeing with the January 200 calls. Again, I like it’s a technical setup, the chart looks really nice here. I think if the market goes this one can run but I also learned that you don’t have to take full size. So if you’re willing to have 10 options, you know today’s a great day to have one or two to start and then wait until tomorrow and see what happens. Action from there.
Nathaniel E. Baker
Yeah, interesting. Wow. So you so how what’s your I guess?
Michael Pisani
Yeah, what is your your holding period typically on these Do you try to sell as soon as you have a profit you get out or you know, so it depends like if I’m day trading or you know, sometimes scalp trading, I may only stay in these for a few minutes to a few hours. Bowling, I’m going out to January because I want to time so I’m looking for I’m thinking Boeing can get up into the 190 area and that’s would be my goal was to either trim it up there or start to take some and I always recommend to people you trim along the way you know you don’t have to it’s not an options are not an all or nothing deal and you always put a stop in place, you know for me 50% Stop Loss If I’m down 50% The chance of that trade working at that point is slim to none. On options.
Nathaniel E. Baker
Yeah, interesting. You need obviously you need volatility for this to work in general. I suspect
Michael Pisani
You need momentum. I don’t like to use the word volatility because volatility may implies that the markets are going wrong, but you need momentum. And if you look at Boeing’s chart, it’s got this nice two and a half we flag is sitting in here and just riding the eight day moving average very nicely. Where the market looks choppier. This one’s holding up nicely and just it’s kind of pretty look to it. After a nice had a nice week and a half run and it’s kind of consolidating. And that’s what I like I’d like to see you have a big move. I don’t like to chase a big move. I’d like to wait to consolidate so it’s been consolidating now so instead of waiting for a breakout to try it down here my stop down. I probably get stopped out at Boeing got down below 169 Again,
Nathaniel E. Baker
okay, okay. Why not just buy the stock I mean, It’s been down for a while and
Michael Pisani
I don’t want help my risk is premium paid here, right? You know, you can put your risk. And so if the worst came to worse, and I stopped was an honor and I’ve had that happens at times, sometimes your stops not honored. Well, if you’re in a if you’re in a bunch of stock and it comes screaming down, then next thing you know, you’re in a world to hurt, making a very emotional decision, at least if you’re in an option you can look at and say, Well, this is my risk is my premium paid, I can’t lose more than you know, I can’t lose more than that. I’m not going to take a huge hit.
Nathaniel E. Baker
So how long have you been trading options? I mean, it sounds like this goes back to like 2010 to
Michael Pisani
2010 2010.
Nathaniel E. Baker
And are these you just do basic puts and calls on anything more exotic collars?
Michael Pisani
I play with spreads sometimes, especially on I used to play with spreads mostly on names like Amazon and Google, just because they were so expensive as a way to cut down your risk and stay in the trade longer to be perfectly honest with you. Yeah. But spreads, I find it be harder to get in and out of, because there’s two moving pieces in this, you get in the middle, you know, gets wider gets harder to hit. So I tend to use straight calls or puts for the most part, honest answer, but you can do whatever you’d like. I do sell cover calls when I have stock I don’t have much stock to sell cover calls against right now. I’ve been pretty much was selling into last year. And so I don’t really have much on there. So I haven’t really been doing that.
Nathaniel E. Baker
How much of this do you do? It sounds like you don’t do very much. Like a lot of people use options just to hedge their portfolio but for you it was only that I keep it out of the money puts and hold on to those at all.
Michael Pisani
If I had enough that I felt I needed to I have time but because my I’m sitting in like 90% Cash my big account, I’m just Oh wow. I just don’t feel the need to do and just been sitting there all year like that. I just don’t feel the need to hedge for that little bit amount. I’d rather sell cover calls if I need to, but are a lot of times I used to also hedge by using VXX calls, which is a derivative of the VIX. Basically saying okay, if the market goes down, the VIX is gonna go nuts. And you can make money on that wave. So I mean, the VIX has been weird this for the last couple of years, because this year, specifically the VIX has just been you know, I use the term broken sometimes, but it just, it just has never seen to really take into account the risk. And even here now it seems to have said, there’s no risk. And when the market is selling, it doesn’t seem to go that much should be going much higher. Hmm.
Nathaniel E. Baker
Interesting. But you are generally bullish for next year. And so you’re not aren’t concerned about a recession? And how that would that would affect things.
Michael Pisani
I personally believe we’re already in a recession. So I, I love how we changed that, oh, two negative quarters of GDP in a row is not a recession. Oh, that’s always been the definition of a recession. But that’s beside the point. So I believe we’re already in one. And I believe that as long as we don’t get any. Listen, you know, you want a black swan event, everybody last year, we’re in this year and worried about China invading Taiwan? Well, that would be a massive uprising and upheaval in China. And that would affect that would cause a big time recession. Because so much of our goods in the world goods come out of China, if nobody’s producing goods, that’s not going to be coming out, by the way that would stop any talk of an invasion of Taiwan. But yeah, I am concerned about a recession going better, bigger lift, especially if the Fed keeps their foot on the gas. Right. But I really think that this is not the end of the game over yet. I think in my opinion, this is a mild bear market. And it’s been a you know, and I mean, my mild is we came down, but I don’t believe we’re gonna get one of these. I see people out there saying, oh, we need to go to 2600 or whatever. I’m like, you know, patients, right? You can’t even you know, as soon as we bounce, the bears come out of the woods, and they we could but I think the odds are that the markets gonna look to rally, especially if inflation starts to come in.
Nathaniel E. Baker
Yeah, interesting. Okay. And but unemployment and things like that potential defaults, which we tend to see in recessions.
Michael Pisani
That’s the big worry here is the one thing that came out last week was that consumer credit has gone through the roof. They’re living on their credit cards. And then you saw that the Black Friday, Cyber Monday sales were huge online. And the worry and that is a concern, right? The concern is that the Fed keeps hiking rates and people are living on their credit cards. Eventually, they’re gonna start defaulting because they can’t even make the minimum payments. Right. So that is an absolute concern. Again, I am have the hope and opinion that cooler heads will eventually figure this stuff out and realize the Fed will go from hiking to suddenly having to start easing and coming back in.
Nathaniel E. Baker
All right, well, that’s a very optimistic view here for our Tuesday afternoon. Here the second to last day of November, as we record this. Let me see here so yeah, maybe in closing, tell us how we can find out more about you. I’ve I’ll put it in the show notes as well. Smart Option trading.com. How does that work? If people want to sign up and where can people find you? I know. You’re active on Twitter.
Michael Pisani
You’re gonna find me very active on Twitter at @optionsMike you’ll find me there all the time. You go to smart option trading.com Click on live trading room. I charge $25 For the first 30 days. That is a get to know me period. If you don’t like me, Akash tea drinks and your Get your out and make hopefully make some money along the way. But it gets your chance to get to know me and get to know how we work and get to see us over some time. So I make it real easy for you to come in and you can cancel anytime directly through Paypal or if you can’t do it, just ask me I’ll take care of it for
Nathaniel E. Baker
you. Cool. And how does it how do you what technology do you use? Is it discord?
Michael Pisani
so we use discord for chat and I use Zoom for video and tool voice because it’s just so much clarity is just so much better than discord? Yeah. And we post everything on Twitter and it goes automatically into discord as well. So you know, whatever floats your boat, but Discord is where we do our chatting all day long. And that’s where the place to come in to see hey, what’s going on what are people saying what are some other people in the room doing?
Nathaniel E. Baker
But you’re on zoom all day long, like live and go
Michael Pisani
live at nine every morning and then go off around for for its earnings season on the on the 435 o’clock.
Nathaniel E. Baker
Wow. Okay, that’s a long day. Yeah. Cool. Well, that’s really cool. Very cool. All right. Well, yeah, everybody go check that out if you haven’t already. Thanks, Mike, for coming on and giving us all these really interesting views. Thank you all for listening. And with that, we will look forward to speaking to you again next week.