Daily Option Trading Commentary

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Not Horrible - Is Good. Assets Are Rotating Out of Bonds and Into Stocks.

Yesterday, the market chopped around for most of the day after a huge run-up Wednesday. That was an encouraging sign for bulls. By late afternoon, the market rallied and it closed on its highs. Earlier in the day, initial jobless claims came in slightly better-than-expected and optimism ahead of the Unemployment Report surfaced. Even though 472,000 jobless claims were filed, traders were relieved that new claims have stopped rising. In recent weeks, initial jobless claims have spiked higher and that trend has stalled. Even if 200,000 jobs had been lost in August, I doubt the market would have sold off.…
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Option Trading Article of the Week

Option Trading - Why I Trade Relative Strength and Relative Weakness!

Posted by Pete Stolcers on January 12

In today’s option trading blog I will discuss relative strength and weakness. This concept is critical to my trading system. Every day I search for stocks that are strong or weak relative to the market If I’m successful at identifying this trait I can build a basket of long and short positions and reduce my market risk. This is my “edge”. I can actually get the market wrong and still make money. When I turn on my screen in the morning I hope for a big market move in either direction. I’ll bet most of you have never had that…

Stock Options Question of the Week

Surrogate Market Positions - How and Why?

Posted by Pete Stolcers on March 11

Question Over a year ago, I featured this question in my option trading blog. The market conditions have changed, but the concept has not. Lee T. asks, “Can you recommend a stock that I can use as a proxy for the S&P? I would like to make directional bets on the market for seasonal trends such as a year-end rally, and swing trades spanning a few days or weeks. But options on SPY don't seem to work well since the SPY has a historical volatility of six. I've seen some people use GOOG as a market proxy but I am also not wild about options on a $400/share stock that trades on the NAS. Are there any NYSE stocks that might work better?

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