Sell Options Spreads – SPY Will Trade Between $206 – $212 Thru Nov Expiration

October 30, 2015
Author: Peter Stolcers, Founder of OneOption

TAKE THE 1 WEEK FREE TRIAL FOR INVESTORS AND MAKE MONEY Posted 9:30 AM ET - The market has been able to tread water after the FOMC statement and we are within striking distance of the all-time high. Profit-taking will keep a lid on the action as we head into the back half of Q3 earnings season. If the market drops to the 200-day moving average, buyers will step in. I believe we will trade in a range between SPY $206 and $212 through November options expiration. The reaction to the FOMC statement tells me that traders are numb to the Fed's threats. They don't believe that we will see a rate hike in 2015. Economic conditions in China have stabilized and their market has a bid. China no longer posts a flash PMI number and we will get the official reading on Monday. This will be our first look at current activity. I'm expecting it to be in line. Domestic economic conditions are stable, but sluggish. Durable goods orders fell 1.2% and GDP grew at a meager 1.5%. I am expecting an upward revision to September's jobs report next Friday and we should hit 200,000 jobs in October. ISM manufacturing will be soft and ISM services will be decent. In aggregate, these numbers will offset. Earnings season is front-end loaded. Mega-cap tech stocks have fueled this rally and the excitement will wane in coming weeks. I don't believe the newly elected Speaker of the House wants to immediately threaten a government shutdown. The debt ceiling needs to be raised next week and I believe an agreement will be reached. This week I took profits on all of my call positions before the FOMC statement. I lock-in huge profits and it's been a great run. Now I am shifting to premium selling strategies. I will sell out of the money call credit spreads on weak stocks and I will sell out of the money put credit spreads on strong stocks. This will be my core strategy for the next few weeks. I like mega cap tech stocks, financials and defense. I do not like retail, restaurant, basic materials and heavy equipment. This strategy allows me to distance myself from the action and to take advantage of time decay. I will also day trade. I feel I can catch any remaining upside on and intraday basis and I can keep my overnight risk exposure very low. If the market breaks below SPY $206 or breaks out to a new all-time high, I will adjust my credit spreads. Look for lackluster trading today with a slight upward bias. . . image

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