TIME PASSES...
We are not getting any younger.
Year on year, we age a year on. Without even knowing it, our Mystylecast Newsletter is in its 52nd Issue - Happy Anniversary!!!
We hope that the contents have somewhat made some difference to you. Personally, relationship and financially. Thank you for all your support...
One thing which we cannot buy back is time. What we do with it and how we add value to the time we use are very important and meaningful when we look back.
What have you done with your time that will bring you forward in terms of health, relationship and financial. If you invest your time wisely in these areas, one minute by minute, one hour by hour, one week by week, one month by month and one year by year..... you will definitely thank yourself in the future that you had spent your time wisely.
Once time passes...we can't turn back the clock...
SPX
SPX failed to break higher and hit resistance on 20 MA and bounced back to close the week at 4328. Intraday volatility remained high and trading was in range of between 1% to 2% daily. VIX also contained to remain high at above 30 whole of week and hitting highs of 34 several time in the week.
Unless any significant positive developments comes out from the Ukraine conflict, SPX is expected to trade rangebound between 4200 and 4400.
Healthcare, consumer defensive and Industrials were the ones holding up SPX while finance and technology continued to selloff. The rate hike of 25 bps is more or less firmed next week and that lead the selloff on finance. However, that did not bring about any reversals in technology in current market conditions where every rally ends quickly with selloffs.
ES S&P Mini Futures opened down 12 points and continued to drop by more than 60 points as at the time I write this on Monday morning. Lets see how this week's market plays it.
NDX
NDX failed to break the 14400 level last week, hit 20 MA and retraced back to 13837, down about 2.5% for the week.
The next break up is still the same at 14400. The support is 13642 and once this breakdown we will see the bottom at 13000 again.
Remember, short trades, sell on strength buy on weakness is still the in play. Higher probability is still towards sell on strength, unless the market turns more positive and VIX turns down below 30 and trade back at range 25.
HIGH VOLATILITY = HIGH PREMIUM...
When volatility is high, Options Sellers get paid more for the risk they take. ie. for the same options which is sold during times when the VIX is elevated, we get to collect more premium. A $5 width SPY Bear Call Spread, 40-45 days DTE, we can collect around $1.30 premium when VIX is at 30 range. When VIX is trading between 20-25, we can hardly get anything above $1.00.
So this is the best time to sell premiums and to reduce risk, just do bear call spreads when there is an upswing in SPY hitting resistance, or forming "M" patterns. The other thing that works for us is volatility crush, ie. reduction in volatility, which will result in the premiums coming down, reducing the option values and giving us a cheaper exit.
Remember, sell Bear Call Spreads on Upswings, with high IV and buyback on downswings and reduced IV.
Alternatively, sell Bull Put Spreads on downswings, oversold at support levels or when "W" pattern appears. However, as markets are on a bearish momentum, just watch for real hard support levels or on a very oversold day to enter bullish trades.
TRADERS TALK
Did you hear last week's Traders Talk?
We had a great topic and so much insight on trading was given out.
Listen to Traders Talk Series 38 if you have not done so. View Past Traders Talk
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DISCLOSURES
Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options: https://www.theocc.com/components/docs/riskstoc.pdf
MYstyework is an Online Financial Literacy Educator and materials provided is solely by MYstylework and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, transaction or investment strategy is suitable for any person. Trading securities can involve high risk and the loss of any funds invested. MYstylework, through its contents, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors, and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. MYstylework is not in the business of transacting securities trades or an investment adviser.
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