Options Expiration Week Begins in a Neutral State. New ETF Extremes Options Strategy Begins Today!

First, I would like to announce that my new Sector ETF Extremes Options Strategy began today. As I have stated over the last few posts the Sector ETF Extremes is a stock options strategy that takes advantage of short-term overbought/oversold extremes in the market. Our so-called flagship options strategy the ETF Extremes, based on four of the most liquid ETFs that represent the major benchmarks (Dow, S&P 500, Russell 2000, and tech-heavy NASDAQ 100) has been extremely (bad pun I know) successful since its launch back in early 2006 with gains that exceed 150%. My goal was to take the strategy to the next step by offering a similar strategy that uses sector ETFs as the underlying rather than the major benchmarks. If all goes as planned we should witness a bit more trading in this strategy as we will follow 8-10 of the most liquid sector ETFs available in the options market.

It has been several weeks since the last trade in the Gap Fade or ETF Extremes strategy. Again, as I have stated repeatedly over the past few years in this blog, cash is a position and “patience pays”. My last post I touched on this concept, “In trading patience is a requirement”.

We could actually see a trade tomorrow in both the ETF Extremes and Gap Fade options strategies if the PPI report is better than economists’ expectations. A pleasing report would most likely cause futures to jump prior to the open which would result in a gap to the upside. Moreover, this could push some of the major benchmarks, particularly the tech-heavy NASDAQ 100 into a short-term overbought extreme. I guess we will see soon enough. As always subscribers will receive a real-time trade alert if and when a signal is triggered.

All of the sector that I follow for the new Sector ETF Extremes options strategy remain in a short-term neutral state. Most notable is the Retail sector (RTH) which has moved to the high-end of a neutral state while the Industrial sector (XLI) has moved in the opposite direction and towards the low-end of a neutral state.

Stay tuned and have a wonderful afternoon. If you have any questions about my options strategies or any options related questions please do not hesitate to send me an email.

Short-term Overbought/Oversold Levels for June 16, 2008

ETF Extremes Options Strategy

• S&P 500 (SPY) – 47.7 (neutral)
• Dow Jones (DIA) – 45.3 (neutral)
• Russell 2000 (IWM) – 56.8 (neutral)
• NASDAQ 100 (QQQQ) – 55.0 (neutral)

Sector ETF Extremes Options Strategy

• Biotech (IBB) – 54.9 (neutral)
• Consumer Discretionary (XLY) – 52.7 (neutral)
• Health Care (XLV) – 45.0 (neutral)
• Financial (XLF) – 47.3 (neutral)
• Energy (XLE) – 53.0 (neutral)
• Industrial (XLI) – 36.7 (neutral)
• Materials (XLB) – 55.3 (neutral
• Real Estate (IYR) – 57.8 (neutral)
• Retail (RTH) – 60.2 (neutral)
• Utilities (XLU) – 58.4 (neutral)

If you would like to follow my strategies with real-time alerts or have them autotraded by a participating broker please click the following link: SUBSCRIBE