Buy Puts and Hold Overnight – This Is A Speculative Trade So Keep It Small – Add On Weakness Wed

August 11, 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. I also have a similar process for stocks and credit spreads. CLICK HERE FOR MORE INFORMATION. Posted 11:30 AM ET - Yesterday, the market bounced off of the 200-day moving average and it rallied through the 100-day moving average. Prices are compressing and those levels are becoming less significant. Horizontal support and resistance and long-term trend lines have become more important. This morning, prices are reversing and much of the gains had evaporated. The market is searching for direction. Traders are on vacation and volumes are light. This back-and-forth motion is nothing but noise. China's trade numbers came in weak Monday and their market rallied on the notion of government stimulus. Trillions of dollars have been spent in recent years to no avail. A couple of years ago, fiscal or monetary stimulus resulted in a sustained rally. Now the news can't even spark follow-through the next day. The PBOC devalued the Yuan by 2%. They sense trouble and this will help exports. China will post retail sales tonight and I believe the number will be weak. Consumers will tighten their purse strings after the recent market crash. Confidence is low and it will impact spending. In a light trading environment, this miss could spark a global wave of profit-taking. I've been pointing to this news event for well over two weeks and I plan to own some puts. If the selling is heavy, we will easily take out the 200-day moving average. This will shake out longs who bought on the 200-day moving average. There is not much else to drive the market and we could see the 10% correction we've been looking for if the news is particularly dire. Asset Managers are not going to buy aggressively ahead of a potential interest rate hike in September. This means the bid will be light and they will pull their bids if the selling accelerates. If China's numbers are better than feared, the market will stage a small relief rally. Then it will tread water until the flash PMI's. The selling has been steady this morning and yesterday's gains have evaporated. The momentum has been established and although unlikely, we could decline to the 200-day moving average this afternoon. I urge you to keep your size small. Own some puts today and hold them overnight. If the news is bad, add to the position tomorrow. Use the 200-day moving average as your guide. . . image

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