July 24, 2014

Grinding, Grinding, Grinding Higher

The market continues the slog higher. But I think we all know how this ends, right?

We might not see a push lower for long, but the pullback is coming. The sectors that have led the short-term push higher are all in an overbought state now, which means it is a great time to start selling some bear call spreads. I was willing to sell vertical call spreads last week, so why wouldn’t I like them even better here?

The only problem is implied volatility. As many of you already know, volatility has reached a historic low which means options prices, thereby premium, is also low. However, that does not mean that opportunities aren’t abound. You just need to search a little harder to find meaningful trades.

You can start with the table below. If you would like discuss theoretical trades I encourage you to do so in the comments section below.

6-3-2014 10-41-03 PM

 

If you are a believer in a statistical approach towards investing please do not hesitate to try my options strategies. I use simple mean-reversion coupled with probabilities for each and every trade. Give it a try, it’s free for 30 days.

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Also, due to the enormous amount of requests over the past week I have decided to keep my annual deal available for several more days. Thanks again for all of the support.

  • walter cashen

    When should you bail out if your sold strike is in danger of being breached in a weekly credit spread ?