© Copyright 2024 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.
Market Support Is Forming – It’s Time To Start Using This Options Strategy
www.1option.com
Yesterday the market was able to close above the low from Friday and we saw late day strength. The S&P 500 is up 12 points before the open and we could challenge resistance at SPY $332. The market bid still very strong and this 11-year rally will die hard. I still believe that there is some downside, but swing traders can start to sell some bullish put spreads.
The big gap down on Monday pushed mega cap tech stocks (AMZN, AAPL, FB, GOOG, MSFT) down to major support levels and they bounced. The market has recovered all of those losses and we are right where we closed Friday. If the SPY closes above $332 we can expect follow-through buying.
Politicians agreed to extend the budget (December 11th) and a government shutdown will be avoided during the election. This was largely expected. The House has approved a stimulus bill, but it won’t get through the Senate.
Next week we will get major economic releases. Until then, the news cycle is fairly light.
The Coronavirus is persistent, but people are resuming their normal lifestyles with caution. I’ve traveled to states with a spike in new cases and I have not noticed any fear. People are wearing masks and my personal observation is that healthy people under the age of 60 are not overly concerned about it. Europe is seeing a spike in new cases and much of the continent is shutting down.
I’ve been expecting the market pullback and we got one. This move has allowed me to evaluate the selling pressure and the bid. Stocks are rich, but bonds are not an attractive alternative with yields at historic lows. We have not seen persistent selling with follow-through. This three steps down and two steps back decline suggests that support will be formed shortly. I am preparing to sell out of the money bullish put spreads that expire in three weeks or less. I believe that any market decline will find support and that we will have time to adjust positions. By staying short-term with this strategy we also have time decay working in our favor. I will release my Weekly Swing Trading Video tonight and I plan to enter a few spreads.
Day traders can look for opportunities on both sides. I have been seeing better day trading opportunities on the long side. Stick with stocks that have relative strength and heavy volume early in the day (Heavy Buying search in Option Stalker). SPY $332 will be a key level to watch. If we blow through it, trade from the long side. If that resistance is stiff, look for sideways action and a trading range today.
Support is at SPY $329, $36 and $322. Resistance is at $332 and $334.50.
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.