Follow Us: TwitterFacebookRSS feed

Big Market Drop Was Expected - 4 New Options Trades For Today [Video Recorded Last Night]

Posted by Pete Stolcers on June 11

Posted 9:30 AM ET – For the last week I’ve been telling traders to reduce risk and to go to cash. The warning signs were apparent and this morning the S&P 500 is down 75 points before the open. I’ve also warned you that this is a low probability trading environment. Bullish speculators are about to get flushed out. A spike in new Coronavirus cases has sparked profit-taking. Key support is at SPY $300 and $295.

In my comments I mentioned that Texas has more virus patients hospitalized now than it did during the peak a few weeks ago. This has also happened in other areas of the country and it will prolong the reopening.

The fact of the matter is that bullish sentiment has not been this high in decades. Stocks are overextended and we were due for a pullback. As I’ve been mentioning, the first wave of selling could be sparked by anything. Once the momentum kicks in, sell programs are triggered and bullish speculators hit the exits at the same time. This downward movement feeds on itself. Option implied volatilities were contracting and premium sellers were taking more risk. That is why our bullish put spread exposure is minimal. I believe that this move will be temporary and that we will find support at the major moving averages.

The economic news has been good and the Fed said that they are not going to raise interest rates through 2022. This safety net will keep a strong market bid. Asset Managers have missed much of this rally and we know that because the volume was light on the way up. Many will be looking to buy this dip and I believe it will be fairly shallow and brief. We are setting up for an excellent trading opportunity once support is established.

Regardless of the new virus spread, I don’t see states going back into a shutdown. The economic destruction was devastating and we are just starting to get back on track. This latest development will impede the economic recovery and it will impact consumer spending.

Swing traders are almost 100% in cash. We have two out of the money options spreads that will expire tomorrow and another one that will expire next week. In last night’s Weekly Swing Trading Video I published 4 new bullish put spreads. We needed a big market pullback to get filled on any of those trades and we are canceling the orders this morning. I’m going to evaluate the price action and I will inform members when it’s time to enter the trades. This video is released to the public on Saturdays, but I decided to release it this morning because the trades are so timely.

.
.

CLICK HERE TO WATCH THE VIDEO WITH 4 NEW OPTIONS TRADES – WE ARE HOLDING OFF ON THE ENTRY

.
.

Day traders need to evaluate the price action for the first 45 minutes this morning. Tech stocks have been strong and that is where we want to focus our buying. Laggards have bounced and most of them will be excellent shorting opportunities. The 1OP indicator will be our guide in the chat room and it will tell us if we should be long or short. Option Stalker searches will help us find the best stocks. Relative Strength 30, Heavy Buying and Bull Run will be the best searches to use on the long side. Relative weakness 30, Heavy Selling, and Bear Run will be the best searches for the short side.

This move has not caught us off guard, I’ve been expecting it. My overnight swing trades are minimal and I’ve been urging you to follow my lead. I will be looking for an opportunity to enter swing trades and I will not be trying to manage losing trades (because I don’t have any). This is why it is critically important to trim your size and exposure in low probability trading environments. It will take at least 45 minutes for me to get my market bearings this morning and I don’t plan on day trading right out of the gate. I will spend that time evaluating stocks and looking for my next swing trades. Once this market drop find support we will have an excellent opportunity to sell bullish put spreads.
.
.
image

Get Today's Options Trades Here
OneOption conducts extensive option trading research and it provides specific options trading entry and exit instructions. Select from a spectrum of options trading strategies and find a service that is just right for you. Hedge funds, professional traders and active investors count on OneOption for solid research.

Stock Option Trading Education