Tom Sosnoff's Portfolio Update and Two Trade Ideas
We asked Tom Sosnoff, aka “El Sos Grande" for his portfolio. This is what he said:
Delta neutral typically means he has balanced his position to be insensitive to small movements in the stock price. Instead, he is aiming to profit from volatility or time decay instead of a directional move in the stock.
TLT January 2024 call ZEBRA (Bullish)
Sosnoff caught the move in bonds over the last last month—rates normalizing along the curve with the two-Year yield at roughly 4.71% and the 10-Year at 4.39%. If you think rates might continue to come down, a long delta TLT position is a cost-effective way to play it. A zero extrinsic value back ratio (ZEBRA) trade sets up with close to 85 delta at a cost of around $5.20, long 2x the 89 strike calls and short 1x the 92 strike calls in the January monthly expiration.
QQQ (Dec./Jan.) put diagonal spread (bearish)
The rally in the Nasdaq has been swift—more than 10% from the low in November. While seasonality is typically strong to the upside into year end, if you think the move might be a bit overdone, a December/January put diagonal spread is a cheap way to get some short delta. Long the Jan2024 385 strike put, with a short Dec15 377 Put, nets around -22 short delta with some positive gamma for a $5.15 debit.
Michael Rechenthin, Ph.D., (aka “Dr. Data”), managing director of research and development, has 25 years of trading and markets experience. He is best known for his weekly Cherry Picks newsletter. On Thursdays, he appears on Trades from the Research Team LIVE.
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