I Love the Smell of Napalm In the Morning – Buy Puts – Use These Levels As Your Guide

August 12, 2015
Author: Peter Stolcers, Founder of OneOption

I just launched a new option buying subscription and I am offering it for $99/quarter. My search algorithms find the pattern we trade and then it filters for options with excellent liquidity that have IVs < 35. I am alerted when these potential trades are triggered and I visually confirm the pattern. I trade according to my market bias and I accept or reject the trade. This will keep us on the right side of the action and only the best trades will go through. Text and email alerts are sent. The system is buying puts. CLICK HERE FOR MORE INFORMATION. Posted 9:30 AM ET - The price action this week has been bearish. Stocks tried to rally off of major support Monday and they were immediately slapped down yesterday. The 200-day moving average will be breached this morning. Tuesday I encouraged you to buy some puts. I hope you took my advice. China's economic numbers were much better than feared (retail sales, IP and foreign investment). However, the PBOC devalued the Yuan for a second straight day. Traders are worried that they know something we don't. Without question, economic activity in China is slowing. This is the largest economy in the world and our market has completely discounted the news. Asset Managers are not going to aggressively bid ahead of a potential interest rate hike in September. They will pull bids and gauge profit-taking during this decline. In the last five years, the 200-day moving average has represented a buying opportunity when it has been tested. That is no longer the case. The SPY rests just above the 200-day uptrend line ($206). Major horizontal support is at $204.40. If these two levels fail, we will see the 10% correction everyone has been waiting for. There isn't a white knight news event that will save the day. The Fed is on recess and officials will not show their hand. Fiscal and monetary stimulus doesn't pack any punch anyway so it won't matter. Earnings season is just about over and the economic news is very light (flash PMI's are the next big release in 10 days). August is a seasonally weak month and we could see selling through the September FOMC meeting. I own puts and I plan to add on weakness today. I will use the 200-day moving average as my guide. If you don't own any puts, don't rush in on the open. The news was not that dire and we will probably get a bounce. If the market makes a new low for the day after one hour of trading, buy puts. Add on weakness. I'm much more interested in a gradual decline. That type of slide is typically marked by a higher open and a close on the low of the day with late day selling. Look for an opportunity to buy puts and watch those major support levels I've outlined. . . image

Daily Bulletin Continues...

Want Full Access?

Become a Member

Start Free Trial

No credit card required.


Previous Bulletin

August 11, 2015

Next Bulletin

August 13, 2015