Today XHB hit above $70 and it is at $70.40 after hours today so what better time to load up on more puts? We bought another tranche of PUTS for January 2024 $70 strike expiry today and noticed others doing the same. Let’s take a look at our XHB tracking chart:
The Fed is expected to raise rates again in May and banks are tightening credit via tougher lending standards. Commercial real estate has a growing list of defaults you can read about here and here.
Let’s take a look at a wider term chart view:
The blue arrow shows the precarious point XHB could be at theoretically if it follows the 2008 crash but note that there were three big waves of declines for XHB. If the pattern holds, we can expect a steep drop, a recovery, another drop later on and the perfect storm of higher interest rates, commercial real estate defaults and bank panics may bring us there.
As a reminder we have put option positions for XHB at $70 and $55 strike levels for January 2024 expiry. If you want to know how that trade pans out.. Stay tuned, stay profitable and stay solvent…