© Copyright 2025 eOption, a division of Regal Securities, Inc., Member
FINRA/
SIPC |
Important Disclosures
950 Milwaukee Ave., Ste. 102 | Glenview, IL 60025
The information on this web site is for discussion and information purposes only. All accounts accepted at the discretion of eOption which accepts customer orders only on an unsolicited basis, and does not make any recommendations regarding any security or securities product with the possible exception of orders executed by our full service bond desk. Nothing contained herein should be considered as an offer to buy or sell any security or securities product. Online trading has inherent risks due to loss of online services or delays from system performance, risk parameters, market conditions, and erroneous or unavailable market data.
FINRA BrokerCheck reports for Regal Securities and its investment professionals are available at www.finra.org/brokercheck.
Options Disclosure: Options involve risk and are not suitable for all investors. Prior to trading options, you must be approved for options trading and read the Characteristics and Risks of Standardized Options. A copy may also be requested via email at support@eoption.com or via mail to eOption, 950 Milwaukee Ave., Ste. 102, Glenview, IL 60025. Online trading has inherent risks due to loss of online services or delays from system performance, risk parameters, market conditions, and erroneous or unavailable market data.
eOption Commissions: Broker-assisted orders are an additional $15. Option strategies involve multiple purchases; therefore your transaction costs may be significant for option strategy trades. A commission rate of $2.00 for equities and $3.99 + $.10/contract for options, per execution, applies to orders entered and filled by eOption's Auto Trade Desk and does not apply to customers who enter their trades directly into the eOption platform and are not utilizing the Auto Trade desk.
Broker Comparison: The competitor rates from published websites were verified on 05/25/2023 and are believed to be accurate, but not guaranteed. Commissions are subject to change without notice. At some firms, commissions may not reflect broker-assisted fees, orders over 1,000 shares, penny stock trades, OTCBB, pink sheet stocks or foreign stock orders. Firms may offer reduced commissions if additional criteria are met.
Blog & Commentary: eOption is neither affiliated with, sponsored by, nor endorses commentary and the opinions expressed are solely their own. Content is provided for educational and informational purposes only and eOption cannot attest to its accuracy or completeness. No information provided has been endorsed by eOption.com and does not constitute a recommendation by eOption to buy or sell a particular investment. You are solely responsible for your own investment decisions, and eOption makes no investment recommendations and does not provide financial, tax or legal advice.
The Most Likely Pattern Today
www.oneoption.com
I’ve only seen a couple of rallies like that during my career.
PRE-OPEN MARKET COMMENTS THURSDAY – The table was set for a massive bounce and I have been warning you about it the last few days. The speed and magnitude of the recent drop was excessive and it was tariff related. The rubber band was stretched and the greatest “pain” would be felt on the upside as shorts scrambled to cover. That is why we have been selling expensive OTM puts!
It’s important to remember that tariffs accelerated the move lower, but they were not the cause of “risk off”. Global economic conditions are slowing and credit levels are at an all-time high. The US has to “roll” $9T worth of debt and given a 3.5 year duration on our bonds, this is something we are going to deal with every year. Bond yields have been rising and the appetite for debt is weak. Higher interest rates will weigh on consumption.
The SPY reached a resistance level that I would already be willing to short on a longer-term swing basis, but since we got here in an instant, we have to wait. The market drop was largely mechanical and so was the rally yesterday. I will be watching for signs that the market can’t advance above SPY $550 in the next two weeks during earnings season. I still view this as nothing more than an oversold bounce and a good short will set up if resistance forms. The longer the market spends time at this level the better. We need option IVs to collapse and for bid/ask spreads narrow. Then we can consider buying puts.
From a day trading standpoint I believe we will see big swings in both directions early in the day. Buyers and sellers are going to battle it out. It will be interesting to see how much short sellers still have to buy to adjust today and it will be interesting to see just how heavy the “risk off” selling pressure is. If we see giant offsetting long candles early on heavy volume, we have to wait for things to settle down. That will ultimately result in a wedge formation and it might take a couple of hours for us to break out of it. A tradeable pattern early in the day would be a wimpy move that loses its momentum in the first hour of trading. It doesn’t matter if it is up or down. I am market neutral short-term. If we get this, the first good window today will be to fade that initial move. Be very selective and enter well. You do not want to be holding overnight positions because the market could open much higher or much lower Friday. If you have nice gains… take them. I doubt that we are going to see a sustained directional move that lasts the whole day because both sides will be active.
The market is right on AVWAPQ. That is a critical level to watch all day. Also watch VXX and TLT to see if there is any movement.
I’m going to go waaaaaay out on a limb today and predict an “inside day”.
Support is at $525 and resistance is at $537.
Content is provided by OneOption, LLC, which has no affiliation with Regal Securities, Inc. (“Regal”) This commentary is provided for information purposes only, and is not a recommendation, offer or solicitation by Regal to buy or sell securities or to adopt any investment strategy. Regal has not participated in the creation of the OneOption content and does not directly or indirectly endorse the content. Any reliance on this material is at the sole discretion of the reader.