Anyone who watches (or in my case, listens to the podcast) of Options Action you will not be surprised that there is a strong bias to the downside.
However, this week April 20, the show went Full On Bear (FOB). There were three trades highlighted on Alphabet, Boeing and the S&P Energy ETF, XLE. Dan was FOB on GOOGL, thinking that it goes below 1000. and Carter Worth was FOB on the XLE and Mike was FOB with BA.
To be fair, Mike was less bearish on the XLE buying a calendar put spread which bets on consolidation. Dan, of course, thinks you should buy . . . . wait for it . . . . A PUT SPREAD! What a surprise.
Mike’s trade on BA was also less bearish than Dan usually promotes as he sold a credit spread. This will also pay off in a consolidation.
Don’t get me wrong, I can be bearish on stocks as well. In fact I buy some long dated put spreads when things go up. For instance I was buying some Apple put spreads with the stock trading around 178, because you never know what can show up around earnings. Now I can sell them for a profit.
But being overwhelmingly bearish is just as bad as being irrationally exuberant. I think it’s just so prevalent on CNBC because it plays well into their overall theme of trying to scare the audience. This brings you back to watch more.
It also sounds ‘smart’ to be bearish. It makes it seems like you have more information and more insight than the average analyst.
Sometimes shadows are not bears, sometimes they are bulls and sometimes they are just shadows.