The big question now is can the stock market do what it has failed to do this month? So far its been whipsaw heaven or nightmare depending on how your approaching this market. My approach has been one of caution with a few trades both on the long and short side. However this month I am off a small amount with 2 short trades left in puts.
The advantage of options is when you get big moves you do not get the brunt of it against you. On the other hand you have an expiration date to take into consideration. The closer you get to that date the more Theta (time value decay) becomes a consideration. And its not a minor one!
In order to trader options for swing trades you need to know what type of premium you are paying. There are some very good sites on the internet that can give you an idea what kind of premium you are paying. Unless your short term trading weekly options the value is a major consideration.
That’s why I would rather short the stock but with my broker it takes about 5 min to find out if you are filled as they have to be able to borrow the stock for you to short it. So for me if the options are priced ok on shorts I buy puts.
As to the stock markets they are now at a short term position where its not advantageous to take new longs except for perhaps a day trade. The SPY is at a ten day high which creates a head wind for swing traders. Its like sports betting you want a tailwind for our betting not an environment that you have a bigger disadvantage than usual.
So today unless I see a setup long for a day trade I am going to forgo swing longs in the stock market. Going short today is out of the question however as if we get any kind of follow through day today we are more than likely off to the races on the upside. So today is an interesting day.
Finally seasonally we are strong going into a holiday weekend. As usual its a mixed bag of variables to consider:)
The stock market looks like it is going to gap up around .5% so at least on the open it will look like a follow through day. But two trend days in the same direction in a row do not happen very often. So take that into consideration if your getting ready to jump on the bandwagon today.
A few days ago I discussed the UK exit trade from the EU. I posted the wrong date on the UK referendum. Its the 23rd not the 17th. So we have the June fed meeting 6 days before the referendum. This makes the trade a little trickier but its still one you should be watching as these types of events really create a lot of opportunity. Very similar to the debt ceiling fights here in Congress.
One final note on the sports betting side of this site. I am going to start posting separate posts for sports betting. That way you can filter out the two going forward by the category menu if you wish to read back over the site on one of the two.
Good Luck Today
RickJ’s Handicapping Picks