As I sat in my office late into the evening yesterday pondering what, if any, really useful market analysis I could give members, I got stuck. “Unpredictable”, “news-driven”,...
Thursday, September 22, 2011
After everything that’s been published elsewhere about today’s plunge, there isn’t much I can add in the way of analysis—so I’ll just briefly summarize the technical picture. The S&P 500 Index is short-term oversold and looking primed for a bounce following this afternoon’s final-half-hour recovery,… …while intermediate-term momentum is rolling over into a new sell signal,… …and the VIX is back at the high end of its August-September range.…
Thursday, September 22, 2011
Pessimism continues to dominate world markets this morning, promising a follow-on to yesterday’s instability. I foresee three possible scenarios (from most “obvious” to least): The sell-off will continue, with volatility spiking higher; Markets will find support for a day (or two, or three) and then drop further; We’ll see a sharp rebound from oversold conditions before the end of the week. What’s important to us isn’t so much which of these plays out, but that fear and…
Saturday, September 11, 2010
Yesterday afternoon we began closing September positions, on the defensive against a steep rally that appears bent on testing the full range of the SPX 1105–1130 resistance zone. We may have to take more aggressive action next week, but I’ll talk more about that after a look at the status of our positions: SPY September/October Double-Diagonal (97/102/109/114): Closed at a loss of 22.54% on total capital risked. When we reach our maximum allowable loss range earlier in the cycle,…
Monday, July 26, 2010
It’s been a quiet week in Lake Wobegon…for strategies that buy volatility, like Calendar Options. S&P 500 implied volatility continued to test three-month lows but stubbornly remained above our entry-trade criteria based on its 6-month range, while very short-term (5-day) realized volatility stayed relatively high. We have until Friday morning to open an August position, and we’re looking for some some indication of whether the S&P can break through the huge 1105–1120 resistance zone, which was first established last fall…
Thursday, May 6, 2010
As I’m sure few members failed to notice, we took a wild ride this afternoon. SPY bottomed out at $105—more than $11 below where it opened. Old-school fundamental analysts went straight to the Correlation Game, blaming fears of European debt contagion, while those who understand how the market works under the hood pointed to a possible fat-finger trade that destabilized the Program-Trading Matrix. As a mathematician looking at a 512-tick chart of SPY during the Event,…
Monday, April 26, 2010
SPY tested our trade-entry price range this morning, but sellers repeatedly came in between $122 to $122.10, decisively rejecting those levels. At this point I still think there’s a good chance that the market will hit a new high before any major pullback—but we base our trading decisions on what the market actually does, not our expectations. I’ll be watching closely throughout the afternoon for a more definitive trade signal and send out a trade alert accordingly.
Wednesday, January 27, 2010
Ah, Fed Day—full of sound and fury…. It truly is “a tale told by an idiot”, and I don’t mean Ben Bernanke. Mr. Market is the mentally impaired character in this metaphor, and he can make life quite a challenge for those of us trying to think and act reasonably. We’ve seen wild swings already today, first up, then down (after news of—surprise—a drop in new home sales), then back up—and now down again. Our plan, as always,…
Tuesday, August 18, 2009
At yesterday’s close, we were showing a small loss on the two August positions still open, but we’re well within the profitability range for the month overall: SPY August/September Calendar Spread #1 (89 Calls, Adjusted to 94/98/100/103) Spread out as it is, this double double-calendar has helped keep our August-expiration risk curve in the black over a wide underlying price range. At the moment, though, we still have an unrealized loss of about 3.3%. The position delta at yesterday’s…
Sunday, June 7, 2009
We were ready to go with our first July trade (a SPY July/August double-calendar) Friday morning—all we needed was for the S&P 500 to show some indication of whether it was going to pull back from resistance in the 945–950 area or power through it. So we waited…and waited…and waited, as the S&P recovered from an opening sell-off to inch above 945, then collapsed back down to short-term uptrend support, which then held as the index traded around 940 for…
Jared Woodard is a registered commodity trading advisor who specializes in trading volatility as an asset class. With over a decade of experience trading options, futures ... Read More
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Tuesday, December 6, 2011
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