Right now, an overall macro take of the market is important, because themes have drastically changed due to the way that people are behaving.
Previously, I used to look at the tech sector with particular emphasis on momentum names in the Cloud and cyber security industries, along with consumer discretionary names, and communications. Now, my overall view has changed due to COVID-19 because the way people are utilizing tech is changing and evolving as we settle into our quarantined lifestyle.
One new area I’m looking at right now is video game makers.
Why?
Because everyone is social distancing, looking to interact online, and entertaining themselves at home. Even if COVID-19 comes to a resolution in the near-term, the impacts of societal behavior shifts will be longer lasting, and the video game industry is one that I expect to get a boom.
We can already see this on the technical charts, though I favor TTWO over ATVI. Both companies have impending earnings reports at the end of the month/beginning of May, and so far they look favorable given they have strong fundamentals and technicals that fit my macro story.
How am I going to trade them?
I like to sell put credit spreads in the weeks leading up to earnings (but not in the earnings series due to rise in IV) and buy long calls in the earnings series (for the rise in IV + price going into the report but not through).
Watch the full segment on CNBC or click here for the full article.
A new take on macro is something that is critical to use to make trades in the COVID-19 bear market of 2020. I’ll be talking more about how I’m trading this market tonight at 7pm CT. Check out the link here to sign up!
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