June 27, 2017

New Heights…But For How Long?

As we all know by now, the major market benchmarks have pushed to all-time highs.

The Dow (DIA) and S&P 500 (SPY) continue to frustrate those of us who sell premium for a living, but given the short-term overbought state I remain comfortable with my current positions.

If anything, the current overbought state allows for more opportunities to sell bear call spreads…especially when looking at the longer-term chart below. There is no doubt that the pot odds side with the bears at the moment. Even if we are wrong in our directional assumption, like we have been over the past few months, by using a high-probability strategy a margin of error is inherently created. Basically, you can be wrong, yet still have a profitable trade..that is the beauty of credit spreads.

 

 

 

 

 

 

 

 

 

 

 

 

 

Over the next few trading days (hopefully Friday) I will be adding my April credit spreads. For those of you who are subscribed to one or both of my options strategies…stay tuned!

If you haven’t, join my Twitter feed or Facebook.

If you are a believer in a statistical approach towards investing please do not hesitate to try one of 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.

Kindest,

Andrew Crowder