Today’s MRKT Call is Presented by Fidelity

How to Play for a Pullback in the S&P 500

On the latest episode of MRKT Call, Dan Nathan, Guy Adami and Carter Worth discuss the rotation happening in the stock market, Dan’s bullish Nvidia trade, and preview what to expect from bank earnings later this week.

Click here to access the charts mentioned in today’s MRKT Call.

Buy May 515/490 Put Spread for ~$5

• Buy to open 1 May 515 put for ~$7

• Sell to open 1 May 490 put at ~$2

Break-Even on May Expiration

• Profits of up to $20 between $510 and $490 with a max gain below $490

• Losses of up to $5 between $510 and $515 with a max loss above $515

Trade Management and Rationale

• This trade idea risks only 1% of the ETF price, breaks even down ~1.3%, and has a max potential gain of about 4% if the ETF price is down 5.3% in a little over five weeks

Buy May/June 95 Call Calendar for ~$1

• Buy to open 1 June 95 call for ~$2

• Sell to open 1 May 95 call at ~$1

Break-Even on May Expiration:

• If the stock is 95 or below the May call expires worthless and you are left owning June 95 call for $1.

• The max risk is the $1 premium paid

Trade Rationale

• Financing owning the longer-dated call for just 1% of the stock price, playing for a gap fill in June towards $100

Topic Timecodes:
S&P 500 (0:00), Nike (14:10), Delta & JETS (23:40), JPMorgan & XLF (27:00)

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WHAT WE’RE READING

• Wall Street Shuns Risk in Run-Up to Inflation Data (Bloomberg)

• Trading CPI: How the Stock Market Could React to Wednesday’s Inflation Report (CNBC)

• Bank of America Ratchets Up Gold and Copper Forecasts, Gives the Best Stocks to Play the Trend (CNBC)

• Commodities Rally Reflects a Better Economy, but Also Poses Inflation Risks (WSJ)

• Top Oil Traders Are Getting More Bullish by the Day (Bloomberg)

• US Regional Banks Challenged by Commercial Property, S&P Says (Bloomberg)

• How Google Lost Ground in the AI Race (FT)

• Boeing Shares Fall After Weak Deliveries and Whistleblower Report (FT)

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