$TF_F bottoming wicks and a fib level bounce – op-ex then what? [charts]

Intraday chart – no real buyers to speak of and higher volume – not a good sign considering most of the bounce was on low volume. We couldn’t get back above the open and after a short lived rally, everyone agreed that value is lower.

120 min chart, fib ext level held with some pretty big wicks on the candles. Price probed lower and was quickly rejected near 650 area, which is not surprising considering options expire tomorrow and that typically limits the range.

There is going to be one of two possibilities here, we just made a higher low or we are going to test the previous lows near 620.

I’m long some IWM and SPY and selling covered calls; high premium + time decay = yummy. The indices will always go up eventually, so this is a good income strategy. I am also long XIV, VIX reversion play as a higher risk in case we rally, thanks to the dedicated guys in the chat.

Congratulations are in order to several members of our chat for getting long some SPY puts and selling them for 300-1000% profit, not bad for an overnight play.

For me it was a good day, I got stopped out on one short, but ended the day up nicely. I will post the summary below.

Someone asked what do the people with a long bias in their trading plan do in times like this. My response, as an intra-day trader, was to say that having a bias should not be part of a trading plan. But if you are still long and in the hole, you really have two choices, you can sell calls, or you can wait for a bottom.

I’m not a fan of buying puts in this environment, the premiums are high and the move is getting long in the tooth. Your opportunity to buy puts was when the market made a triple top last month and volatility was low, or even the first day after the downgrade by S&P.

If you are a deer in the headlights, its too late, make sure you are in decent companies and look into options strategies to sell calls against your stock.

EOD Summary

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