I’d almost rather be stuck between a rock and a hard place! Just picture those two tree trunks as SPY $139.80 and $140.90 and the dog an out of the money options trader. Range bound markets are fabulous to those selling options, selling premium, but they will pick the pockets of those riding this uneventful market. Since the Draghi and FED drama of two weeks ago the markets are stuck in a tight range. In order to profit you have to pick your stocks, entries, and exits wisely.
Today’s trading day is a great example of what we’ve been seeing as of late, as we had a last minute stampede to close the markets almost where they closed last Friday, and last Thursday.
While last week I was leaning toward a pull back to ~$137 on the SPY, the odds of that pull back, at least now, in my view are declining as the markets seem impervious to downside. A break of $140.90 with conviction as well as a break of the June 4th Channel will send the markets higher and ultimately to new highs for the year.
Today I positioned myself with CAT $90 calls @ $.23, GS $105 calls at $.40, SPY $141 calls at $.44, and SLV $27 calls at $.38. When we do finally break this narrow range, we will see a burst of 1-1.5% higher and I don’t want to miss out on all the fun.
Again the central banks will not let these markets collapse, I’ve only said that about 500 times this year. However I do think a move out of bonds will keep the market going higher.
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