P1 + P2 Trade Alert: 1-1-1 & More Premium selling
P1 + P2 — an SPX 1-1-1 for income and a big-payday zone, plus a fresh SPY put
Market Intelligence
The master driver: A benign, low-volatility, risk-on tape — with a hawkish twist. Cooler June CPI and PPI took the near-term Fed off any hike path, VIX sits sub-16 and bond vol is calm — but a chip/AI-capex rotation is splitting the market (Nasdaq down a 2nd day, Dow and small-caps green) and positioning is complacent, so there’s thin cushion if a shock hits. TSMC posted a record quarter but raised capex, reviving AI-overspend fears; the dollar is falling; and an Iran oil bid keeps a live inflation crosscurrent. Live scanner (1:00pm ET): SPY $752.85 · QQQ $708.06 · GLD $366.04 · /MES 7,595.12.
Volatility: VIX 15.67 (−5% on the day), below its ~19–20 long-run mean and near the ~17.6 median — cheap-to-fair, not rich. MOVE (bond vol) 68.5 (sub-80 = calm). VIX futures in normal contango but compressed (VX6/VX1 ~1.06). Both equity and rate vol are low and falling — thin premium to sell, cheap protection to own.
Rates & Fed: Fed on hold at 3.50–3.75% (4th straight). 10Y ~4.55% (pulled back on the soft PPI), 2Y ~4.18%, curve +37bp. CME FedWatch ~83% hold for the Jul 28–29 meeting; Chair Warsh stayed hawkish (”no tolerance for persistently elevated inflation”) but declined to threaten a hike post-CPI. September odds are genuinely two-sided (~44–63% across sources).
Equities & Breadth: A split, narrow tape — S&P 500 −0.37%, Nasdaq −0.76% (chips down a 2nd day), Dow +0.14%, Russell 2000 +0.38%. Rotation out of semis, into value, small-caps, and megacaps. The trigger: TSMC’s record Q2 (rev +33.7% to $40.2B) came with a raised FY capex plan ($60–64B) → renewed AI-overspend worry. Strength was elsewhere — UnitedHealth +5.6%, Abbott +12%.
Cross-Asset: Dollar down is the dominant driver — DXY ~100.40 (−0.5%). TLT ~$84.27 (firmer, still near a 52-wk low). GLD $366.04 (scanner) — gold is unwinding Tuesday’s Hormuz spike ($4,082 → ~$3,950 spot), not pressing highs. SLV ~$53 (+1.8%). Crude has an Iran bid (levels disputed, ~WTI $72–80). HYG ~$79.71 — no credit stress.
Catalysts: June CPI −0.4% m/m / 3.5% y/y (vs 3.8% est) and PPI −0.3% m/m — two cool prints that pushed back the hawkish repricing. Retail sales +0.2% (light), claims 208K. Netflix reports after today’s close (the live wire); big banks + UNH already landed strong. Next FOMC Jul 28–29.
Sentiment: CNN Fear & Greed 46 (Neutral) — up from 39 a month ago. CBOE equity put/call ~0.62 (below the 0.70 line = low hedging / complacent), VIX sub-16 at a 2-week low. Structural bid underneath: YTD buybacks >$925B + record retail cash. Net: not fearful, not euphoric — but complacent-bullish positioning means a thin cushion if something breaks.
Trusted Voices:
Charlie Bilello (Creative Planning) — ✅ fresh (Jul 14, “Week in Charts”): S&P 2026 EPS growth ~+24%, hyperscaler capex near peak, the Buffett Indicator at a record 234% (~3 SD above average), real GDP slowing to ~1.3%; small caps +>22% in H1 (best since 1991).
Danielle DiMartino Booth (QI Research) — ✅ fresh (~Jul 13–14): the bear case — argues the US is already in recession (teen hiring lowest since 1948, 14 straight months of negative payroll revisions, WARN filings highest since 2009); non-mortgage debt service now exceeds mortgage for the first time.
Liz Ann Sonders (Schwab) — ⚠️ no fresh post this week: latest is a within-month Market Snapshot (not the last 72h) — improving price-breadth but a more volatile regime, deteriorating LEI breadth and a negative earnings-revision trend. (Flagged as slightly dated rather than presented as today’s take.)
Bottom line: cheap-to-fair vol + a complacent, narrow, record-valuation tape (put/call ~0.62, VIX <16, Buffett Indicator 234%) means premium sellers are paid thin and hedges are cheap to own — a backdrop that rewards defined-risk structures and keeping tail protection on over reaching for yield. That’s exactly the lens behind today’s P1 and P2 moves below. Not a recommendation.
The Trades
🔒 Paid subscribers — the trades below.
