July 28, 2017

Gap Fade Options Strategy and Signal Nearing for New Sector ETF Extremes Options Strategy

The NASDAQ 100 (QQQQ) opened lower today for a gap lower. However, the gap was only $.21, which in most cases is a borderline signal. Had QQQQ been in a short-term oversold state a signal would have been triggered, but with the tech-heavy index firmly in a neutral state and the gap only $.20 a signal was not triggered and the strategy was better for it as we were able to avoid a loss for the trade.

The risk/reward just isn’t high enough when the gap is only $.20 while QQQQ is in a neutral state. I typically purchase an in-the-money option with a delta between .50 and .65 and when taking the bid/ask spread penalty in to account a gap close on a gap like today would have limited gains. As I said the strategy avoided a loss and who knows we could have a much better setup tomorrow as QQQQ closed near the lows of the session.

Several of the sector ETFs that I follow for the Sector ETF Extremes Options Strategy have moved into an short-term oversold state and are very close to a signal. Another decent push lower tomorrow will surely signal a trade in the new strategy and we can’t wait. The response has been outstanding so far so there is the potential that we might have to put a cap on subscribers soon. Don’t worry, you can always get on the waiting list if we run out of room.

Give the strategies a try. If you are not 100% thrilled then do not hesitate to email within 30 days and we will refund your money immediately. SUBSCRIBE

Andrew Crowder, Chief Options Strategist, Crowder Investment Research, LLC

Overbought/Oversold Levels for June 18th, 2008

ETF Extremes Options Strategy

  • S&P 500 (SPY) – 31.3 (neutral)
  • Dow Jones (DIA) – 27.6 (oversold)
  • Russell 2000 (IWM) – 45.3 (neutral)
  • NASDAQ 100 (QQQQ) – 39.6 (neutral)

Sector ETF Extremes Options Strategy

  • Biotech (IBB) – 41.1 (neutral)
  • Consumer Discretionary (XLY) – 29.8 (oversold)
  • Health Care (XLV) – 30.9 (neutral)
  • Financial (XLF) – 30.8 (neutral)
  • Energy (XLE) – 66.1 (neutral)
  • Industrial (XLI) – 24.4 (oversold)
  • Materials (XLB) – 51.7 (neutral
  • Real Estate (IYR) – 32.5 (neutral)
  • Retail (RTH) – 34.3 (neutral)
  • Utilities (XLU) – 57.0 (neutral)

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