I don?t like this market. I don?t imagine too many people do. Those pure blooded good American bulls, who?s glass is always half full, are devastated with every additional 15-20 dip in the S&P. Put holders and short sellers are in their glory, but life for them isn?t particularly easy either. When the market tanks ? pretty much on a daily basis ? the subsequent bounce sends the shorts scrambling to cover to keep some of their profits.
Either way, it?s stress, stress and more stress. Personally, I don?t need that mierde in my life. I work hard to avoid stress, and I?m pretty good at it. That?s why I plan to step back and watch the market for a bit. I want to wait until the smoke clears before we try to trade again. It might be a week or six weeks.
It?s going to be interesting to see how it all plays out. I feel bad for Bear Stearns investors but not that bad. They should have had their shares collared, so I can?t get too worked up. They could have avoided a huge portion of their losses. Hopefully, they learned something from the experience -- if they have any money left to invest.
Last Tuesday?s huge up day seems to be a fond memory. The bounce didn?t hold. Now, there doesn?t appear to be anything to be optimistic about. The CPI was a bit encouraging and the Michigan sentiment index was acceptable as well. But, the combination of both positives couldn?t hold off the bad financial news. And, it appears there is more to come.
There?s a lot of economic news scheduled for this week, including the Fed meeting. Will it be a half point cut? Three-quarters of a point? A full point? The consensus is for a ? point rate cut.
I would be quite surprised if anyone chose to play the quickie trades in this environment. Or, if they did, I certainly hope they adjusted the strikes. But, with the market fluctuating and the massive increasing volatility, it would just be looking for trouble to trade strategies meant for non-trending markets.
This is an unusual trading week in another respect. The markets will be closed on Friday for Good Friday. That means our European style options will cease trading on Wednesday. The opening settlement will be on Thursday (instead of Friday). Make your decisions accordingly. Plan ahead and don?t be greedy.
S&P 500 Support & Resistance:
CPTI MARCH POSITIONS
On 1/22, with the RUT at about 670, we sold 20 RUT March 540 puts and bought 20 RUT March 530 puts for a credit of $.60 ($1,200). Maintenance is $20,000. We will look to put on a bear call spread in the future - IF it makes sense.
CPTI March Position #2 - SPX Iron Condor ? 1288.14
On 1/28, with the SPX at about 1330, we sold 10 SPX March 1150 puts and bought 10 SPX March 1140 puts for a credit of $.50 ($600). Then, we sold 10 SPX March 1490 calls and bought 10 March 1500 calls for a credit of $.55 ($550). Total net credit is $1.15 ($1,150). Maximum profit range is 1150 to 1490 (340 points).
CPTI March Position #3 - SPX Bull Put Spread ? 1288.14
On 2/6, with the SPX at about 1342, we sold 20 SPX March 1140 puts and bought 20 SPX March 1130 puts for a credit of $.60 ($1.200). Maintenance is $20,000. We will look to put on a bear call spread in the future - IF it makes sense.
CPTI APRIL POSITIONS
CPTI April Position #1 - RUT Bull Put Spread ? 662.90
On 3/5, with the RUT at about 674.50, we sold 20 RUT April 560 puts and bought 20 RUT April 550 puts for a credit of $.55 ($1,100). Maintenance is $20,000. We will look to put on a bear call spread in the future - IF it makes sense.
CPTI April Position #2 ? SPX Bull Put Spread ? 1288.14
On 3/10, with the SPX at about 1288, we sold 20 SPX April 1110 puts and bought 20 SPX April 1100 puts for a credit of $.55 ($1,100). Maintenance is $20,000. We will look to put on a bear call spread in the future ? IF it makes sense.
ONGOING STRATEGY - THE ZERO-PLUS Strategy
ZERO PLUS POSITION - SPX ? 1288.14
On 2/6, with the SPX at 1342, we sold 30 SPX March 1140 puts and bought 30 SPX March 1130 puts for a credit of $.60 ($1,800). Maintenance is $30,000. We'll look for a bear call spread to complete the Iron Condor - IF it makes sense.
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