- This topic has 0 replies, 1 voice, and was last updated 7 years, 4 months ago by .
Viewing 1 post (of 1 total)
Viewing 1 post (of 1 total)
- You must be logged in to reply to this topic.
Become a Great Options Trader
Home › Forums › Swing Trades › Buy The Blood Using SPY
Oversold is getting even more oversold.
I’ve been hesitant about adding any more risk until we see the markets firmed up… one of the reasons was that the vol markets weren’t responding like they should be when stocks are off 10%. The other reason was that the markets felt “orderly” with this selloff (as ugly as it has been).
The lower trendline was breached today, and we’re really close to 1800 on the SPX.
There is a very specific setup I’m looking for here. AT the time of this writing we’re headed into lunch and the intraday lows are sitting at 1804.
Simply put, if 2PM EST comes around and we are below that low, we will most likely be undergoing significant liquidation in the markets.
The bet I am taking here is that the markets will, at some point next week, test today’s mid range. That’s right around 183 on SPY.
Here’s the Trade:
Buy to Open SPY Jan5 183 calls.
I am NOT Putting a price on this yet, although I think anywhere from 2.75 down to 2.50 is a good price.
Full risk, sell half on a double.
THE ONLY WAY THIS TRADE IS ENTERED IS IF WE FLUSH INTO THE CLOSE.
That means the trade isn’t good here, but it will be good if we get an outright collapse into the close.
This is an extreme countertrend bet based off of several readings– McClellan oscllator, deviation from moving averages, breadth readings, and so on. Keeping it simple here, if it works it works, if it doesn’t my risk is limited.
If you really want to leverage up, I would look at TNA calls into any kind of flush, as well as DWTI puts.