August 17, 2017

Credit Spread Strategy Update – Market Remains Range-Bound

Quick Options Strategy Review

I just wanted to remind everyone that I placed my first trade in the New Credit Spread Options Strategy, or should I say Crowder’s Credit Spreads. You can check the official trade in the link below.

As it stands the credit spread is worth approximately $.48 per contract. I was able to purchase the credit spread in IWM for $.34 so the trade is currently down $.14 per contract. Certainly nothing to worry about at the moment, as the underlying IWM is still 5.1% away from the short strike at 86. Of course, if IWM continues to move sharply higher over the next few days then I might have to take a closer look at potential adjustments.

The window dressing advance that typically occurs during the end of each quarter should fizzle out soon enough. With IWM nearing an extreme short-term overbought state I would expect to see a short-term decline once the upcoming holiday passes. However,the days surrounding July 4th are known to be quite bullish on a seasonal basis, so I will be keeping a close eye on this one.

Quite honestly, there might be the potential to turn this spread into an Iron Condor by adding a bull put spread, but I want to see what the market offers before I make that decision.

Stay tuned.

Here it is: the first trade in my new Credit Spread Options Strategy, officially named Crowder’s Credit Spreads. I will contniue to go over the trade in full detail in the Free Weekly Options Report.

Market Mumbo Jumbo

Read Frederick Ruffy’s Daily Options Report – he does a  great job over at Seeking Alpha.

Options Indicator – Overbought – Oversold

Surpisingly, none of the ETFs I follow in the High-Probability, Mean-Reversion Indicator have moved into a short-term extreme.

You can see all of the performance results for the High-Probability, Mean-Reversion strategy here.

Summary

Same message: Not much has changed over the past few weeks – range-bound trading persists. I appears we could see the markets move sideways for a few more months. Are the summer doldrums already upon us? How long can SPY stay in this range of roughly $126 to $137? The question is, while I continue trading extremes in the HPMR strategy , how can I take advantage of the range bound movement at the same time. You guessed it – a credit spread! I will discuss this further in Weekly Options Report.

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