Check out U.S. Treasury yields. The 1-month is up around 4.5%, the 1-year is under 4%, and the 30-year is near 5%. That kind of inversion shows the market’s betting on short-term cuts.
Healthcare Stocks are Lagging Behind
Industrials (XLI) are doing great Year-to-Date (YTD), while Healthcare (XLV) isn’t.
If you look at the top 10 largest individual components of the Healthcare ETF (XLV), you can see that JNJ is the top-performing stock while UNH is the worst. This is a complicated field, so we are sticking to the ETF.
We have a bullish trade in XLV at the bottom of this email.
VIX (Volatility of the S&P 500)
We’re in the late part of August, and volatility remains low. The current VIX median is 15.9, considerably below the long-term August median of 18.5.
Looking ahead, September stands out as the most volatile month of the year, with a median VIX of 19.5. Historically, this has coincided with September also being one of the weakest months for stock performance.
Healthcare stocks have been mostly left for dead, but have seen implied volatility staying bid. XLV is a healthcare ETF with broad diversification, the highest weightings in LLY, JNJ, ABBV, and UNH. If you think they may be due for a bounce, a call diagonal long the OCT 135 and short the SEP 139 is a cheap way to get around 25 long delta.
NVDA ($181.29) Iron Condor (AUG29) $1.56 Credit
Volatility remains low... is this really all that big of an earnings announcement? Maybe the move is already backed in? NVDA has chopped around the 175-185 range for the last 30+ days, if you think maybe the news is already baked in, selling an iron condor short the 167.5/162.5 put spread and the 192.5/197.5 call spread in the weekly trades for around 1/3rd the width of the strikes with a slight short delta lean.
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