After the gap down this morning there was not that much action in the market. Financials were the worst hit today while tech was modestly down, with each name in FANG down around a couple percentage points. Even though the VIX was flat today, despite the 2% down move in the S&P, option premiums were very expensive the whole day, leaving me unable to buy any premium.
As I am writing this, the S&P 500 is down 20 points in the pre-market, looking to extend its losses from Friday. In order to navigate this weeks markets, I am going to lay out a few scenarios that I see happening tomorrow and how to play each. While it is hard to make a prediction for how long the selling will last, given that this is such a shock to markets and we have only seen one day of trading post Brexit, I will give a few trades that I will be watching, both short and longer term.
As the week comes to an end there is a lot to reflect upon in regards to the trades that I put on. With Friday’s crazy session finally coming to an end it is time for this weeks Hindsight Trader blog. I am going to go over all of the big trades I put on this week; what worked and what didn’t work and how we can learn from these trades going forward.
All this week I have been singing the same tune, that is, I believe that premiums are too expensive this week. I still believe that the implied volatility is way to high for the move that we will see after the Brexit. In turn I am playing it multiple ways to capture the potential of an IV collapse. I will go over my reasons for each individual trade, and also what the risk/reward is for these as well. Here are the trades
