Rippers Weekly Recap 7/08

Hey everyone, it’s @StockMKTNewz Evan!

I spend 70 hours every week looking for news so you don't have to. That causes me to tweet a lot which can be hard to keep up with. Having somewhere to put all the major stories in 1 easy to view place is really valuable, and that's why I make this newsletter!

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How The Stock Market Performed This Past Week

All images below are sourced from finviz.com 

Heat Map of the S&P 500

How The Largest Stocks Performed

Best Performing Large Cap Stocks

Worst Performing Large Cap Stocks

💡SaberTrade Ideas: How To Trade a Potentially Disastrous Labor Dispute At UPS

Disclaimer: Not Financial Advice

UPS is in the process of negotiating a new contract with the International Brotherhood of Teamsters – the union that represents its workers. Negotiations broke down Wednesday in a nasty way, with finger pointing on both sides. The current contract is set to expire at the end of the month – and a massive strike will begin in August if a deal is not reached. A similar dispute occurred in the late 90s, ending with a huge strike that damaged UPS.

As traders, we ask ourselves the eternal question: How do I make as much money as possible off this? 😊 

If you think the market is underestimating the likelihood or magnitude of this strike, there are a few ways to play it:

  • Simply sell short UPS.

  • Buy a direct competitor like Fedex, betting that a theoretical strike at UPS will make some of its customers start using Fedex instead.

Both of these ideas leave you with exposure to a lot of factors besides the strike, which could impact your profit.

A cleaner way is to:

  • Buy Fedex and short UPS so that you can hedge out a lot of these factors while still gaining the exposure you want.

  • Use options to bet on the volatility term structure. At the time of this writing, the implied at-the-money vol for the first week in August is very close to the implied at-the-money vol for the last week in July. This means the market is assigning minimal likelihood to a big move in UPS immediately after the union contract expires. To take advantage of this, you could buy an ATM put – expiring Aug 4 – and sell an ATM put – expiring July 28.

This Week's Major Headlines

Get Prepared For The Week Ahead!

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