It looks like the path of least resistance might be down, at least on a short-term basis. I'm not suggesting new trades tonight but if you feel like you must trade I'm adding a bullish bet on the volatility index (VIX), which should rise as stocks fall.
NEW DIRECTIONAL CALL PLAYS
Volatility Index - VIX - close: 18.24 change: +1.17
Stop Loss: 15.45
Current Option Gain/Loss: +0.0%
Time Frame: 3 to 4 weeks
New Positions: Yes, see below
Why We Like It:
Stocks look fragile and any acceleration lower for the market's major indices should fuel a rally in the VIX index. I do consider this an aggressive, higher-risk trade since the stock market's longer-term trend is still higher. I would only trade very small positions.
I am suggesting new positions now. More conservative traders could wait for a rise past the 20.00 mark. NOTE: VIX June options expire on June 15th.
Open Small Bullish Positions
Buy the June 20.00 call (VIX1115F20) current ask $1.75
Entry on May 17th at $ xx.xx
Earnings Date --/--/--
Average Daily Volume = xxx
Listed on May 16th, 2011