If the sentiment worsens, look for Chinese stocks

Following recent speculation that the US is looking for a way to curb US cash flows to China, it has scared the markets. It became clear that this was not a confirmed final decision, but just one of many options for the next move.

Investors are already looking at the options market and rather the options with the highest volatility against Chinese companies. The more things change, the more they stay the same. NIO's contracts occupy 7 of the top 15 positions. NIO's management has decided to cancel the scheduled conference after posting bad reports, which has caught the attention of options traders. Six of the seven contracts are put options.

In addition to the NIO, the danger is also stealing against Alibaba, iQIYI, Huya, Baidu, Luckin Coffee and other names. Despite the initial news, which was presented in a rather chaotic way, it managed to move markets.

This is also an example of the need to be flexible and trade options. In this way the risk can be diversified successfully. Alibaba cleared $ 26 billion of its market capitalization in 5 minutes - this is volatility. Micron also took it down with a 10% drop, suggesting that semiconductors respond to specific events, especially when there are reports.

Which is the next company that will take it? Names such as Roku, Beyond Meat and even Tesla appear in the list of high-volatile options. Last Thursday, Elon Musk became the center of events after a leaked email detailing Tesla's chances of reaching 100,000 deliveries by the end of this quarter. This has reassured investors somewhat, but if the story repeats itself, the delivery report will be released this Tuesday or Wednesday, but it will put the full focus on the company's reports. The finance department has not yet set a release date for the report, but last year, the report came out on October 24th. The smart move here is to stay neutral.

Beyond Meat remains under pressure despite the announcement by McDonalds that it will try a new plant-based burger by BYND. The stock still doesn't reflect the good news so much. In the absence of cash flows, reports or even counterparty deals, their stock is driven mainly by the news. The sentiment has changed.

Roku is in a similar situation with regard to sentiment, which is currently quite negative. In either case, downstream options can be sold.

It's nice to sell option contracts. Time is on your side. Your chances of winning a deal increase with time. Going into the eternally scary October (because of previous market crashes and sales, not Halloween), taking short positions is a wise option.

This is the position of Excelsior Capital Partners.

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