© Copyright 2022 eOption, a division of Regal Securities, Inc., Member FINRA
| Important Disclosures
950 Milwaukee Ave., Ste. 102 | Glenview, IL 60025
The information on this web site is for discussion and information purposes only. All accounts accepted at the discretion of eOption which accepts customer orders only on an unsolicited basis, and does not make any recommendations regarding any security or securities product with the possible exception of orders executed by our full service bond desk. Nothing contained herein should be considered as an offer to buy or sell any security or securities product. Online trading has inherent risks due to loss of online services or delays from system performance, risk parameters, market conditions, and erroneous or unavailable market data.
FINRA BrokerCheck reports for Regal Securities and its investment professionals are available at www.finra.org/brokercheck.
Options Disclosure: Options involve risk and are not suitable for all investors. Prior to trading options, you must be approved for options trading and read the Characteristics and Risks of Standardized Options. A copy may also be requested via email at firstname.lastname@example.org or via mail to eOption, 950 Milwaukee Ave., Ste. 102, Glenview, IL 60025. Online trading has inherent risks due to loss of online services or delays from system performance, risk parameters, market conditions, and erroneous or unavailable market data.
eOption Commissions: Broker-assisted orders are an additional $6. Option strategies involve multiple purchases; therefore your transaction costs may be significant for option strategy trades. A commission rate of $2.00 for equities and $3.99 + $.10/contract for options, per execution, applies to orders entered and filled by eOption's Auto Trade Desk and does not apply to customers who enter their trades directly into the eOption platform and are not utilizing the Auto Trade desk.
Broker Comparison: The competitor rates from published websites were verified on 3/1/2022 and are believed to be accurate, but not guaranteed. Commissions are subject to change without notice. At some firms, commissions may not reflect broker-assisted fees, orders over 1,000 shares, penny stock trades, OTCBB, pink sheet stocks or foreign stock orders. Firms may offer reduced commissions if additional criteria are met.
Blog & Commentary: eOption is neither affiliated with, sponsored by, nor endorses commentary and the opinions expressed are solely their own. Content is provided for educational and informational purposes only and eOption cannot attest to its accuracy or completeness. No information provided has been endorsed by eOption.com and does not constitute a recommendation by eOption to buy or sell a particular investment. You are solely responsible for your own investment decisions, and eOption makes no investment recommendations and does not provide financial, tax or legal advice.
Quadruple Witching – Watch For Call Option Lottery Trades Today [Here’s What We Need]
This week the market has been able to rebound from a mini-correction that tested the 200-day moving average. Support at SPY $300 has been confirmed. Stocks will try to float higher and we could test SPY $322 in the next few weeks as Q2 earnings season approaches.
New Coronavirus cases are growing as the economic recovery unfolds. President Trump said that we will not shut the country down again. Social distancing and facemasks are needed to contain the spread of the virus. This new spike in cases is likely to slow down the recovery and it will impact consumer spending.
If the economic recovery is sluggish, we can expect monetary easing from the Fed and fiscal stimulus from the government. The Fed is buying corporate bonds and Congress is ready to approve additional stimulus that could reach $1 trillion. President Trump is also considering a $1 trillion infrastructure bill as well. The kitchen sink is being thrown at the economic recovery.
Asset Managers know that fixed income investments yield negative real returns because they don’t keep pace with inflation. They will take their chances on the economic recovery and they are buying stocks. The Fed “safety net” has kept buyers engaged and major technical support at SPY $295 is firm.
Tech stocks have been leading the charge and many of them have benefited from the virus. They are not exposed to supply shortages and many of their employees can work remotely from home. We want to focus on this sector.
Swing traders should be selling out of the money bullish put spreads on strong stocks. In this week’s Weekly Swing Trading Video I highlighted seven bullish put spreads. We have not been able to get filled on any of them yet and we need a small market pullback. We are not going to chase these stocks. Market conditions are still “nervous” and we can expect pullbacks. During the last three trading sessions we have seen late day selling and that is a small warning sign. If we don’t get filled on our bullish put spreads, we will reevaluate and find new potential opportunities next week. I don’t mind being in cash and if we do enter trades we need to excellent entry points. We are selling bullish put spreads that expire in three weeks or less and we are leaning on major technical support. The short strike price is below that technical support and that will increase our probability of success. Option implied volatilities are still elevated and an IV contraction will favor premium selling strategies. We also want to take advantage of accelerated time premium decay and that is why we are staying relatively short-term with these trades. Today our remaining bullish put spreads will expire worthless (maximum profit) and we will be 100% in cash.
Day traders need to watch the opening gap higher today. We are going to challenge the high of the week and that resistance might hold. Find stocks with relative strength and wait for the market bid to be tested. This is quadruple witching and conditions could be choppy today. I am favoring the long side and I am favoring stocks that are breaking through horizontal resistance. Relative strength and long green bars closing on their high in the first half hour of trading get my attention. Heavy Buying, Relative Strength 30 and Bull Run are my favorite searches.
We are in the summer doldrums and the news cycle is light. We don’t have any economic releases for earnings to lean on. The market is starting to settle into a trading range and volume will decline as a major holiday approaches in the next two weeks. We are back in a fairly low probability trading environment and you should error on the side of caution.
I believe that the market bid will be decent today and we could see a late day rally. I will be looking for option lottery trades in the last hour of trading where I can buy options for pennies and sell them for big gains. I will need a strong close above SPY $315.50 for this opportunity and we could get it.
Content is provided by OneOption, LLC, which has no affiliation with Regal Securities, Inc. (“Regal”) This commentary is provided for information purposes only, and is not a recommendation, offer or solicitation by Regal to buy or sell securities or to adopt any investment strategy. Regal has not participated in the creation of the OneOption content and does not directly or indirectly endorse the content. Any reliance on this material is at the sole discretion of the reader.