$SPY #Options – #DayTrading puts as the market plummets

For twelve days the major market leaders defied the falling long-term breadth, measured by the McClellan Summation index (the all-important NYSI) dragging the general market high and higher on FED intervention (I guess) and irrational exuberance for the big, big tech stocks.

Well, today, the NYSI 13th day down, took care of that. Across the board, the indexes and stocks plummeted. The Dow was down 800 points, the Nasdaq Composite down 598. High flyers AAPL down 13%, TSLA down 14%, NVDA 13%, ZM down 14%. A lot of shock going around as exuberance gave to way how can this happen? Aren’t these stock things supposed to go up every day?

Funny.

Anyway, it was great day for day trading SPY puts:

The strategy for taking these trades is stated in this link: #DayTrading $SPY #Options – Buying calls and puts.

FIRST TRADE: 320%.

SECOND TRADE: SOME ICING ON THE DAY

#DayTrading $SPY #Options – after seven days up, SPY gets put

As SPY tried to gap into an 8th day up in a row, it was obvious any fall back through the open was trigger to buy the puts.

FIRST TRADE:

SECOND TRADE ENTRY:

SECOND TRADE CLOSE:

(CLICK ON CHART FOR A LARGER VIEW)

#DayTrading $SPY #Options – Buying calls and puts

The contents of this post appeared here last on June 11th. I’m lifting it intact because nothing ever changes in the strategy.

There are so many options strategies in the stock market the head spins – a straddle, a strangle, a naked and/or a covered put and/or call, a calendar, a condor, an iron condor, an iron butterfly (isn’t that a rock band?) and any combination of any of these for hedging purposes, for capital appreciation or preservation, for gambling. Mind boggling.

But buying options…

Buying options, just plain buying a call or a put, everyone will say is a “fool’s game.”

Regardless of whether a trader buys calls or puts on index ETFs like SPY or QQQ or IWM, or buys options on stocks, there are only three things that can happen – the option goes the trader’s way (good), or the option goes against the trader (bad), the option goes sideways with price decay over time (also bad).

Two out of the three possibilities for the option buyer are losers. What fool would want to play that game?

But is it really a fool’s game, like everyone in options trading says?

For day traders
it doesn’t have to be. If the trader is persistent, disciplined and experienced, it almost never is.

Let’s take SPY options as the prime example — very liquid across multiple strikes, tight spreads, hardly any time decay on a trade for only a day, a stop-loss is close by and immediate, and the profits, if there is a trend for the day, can be substantial, even rather astounding.

Also great for scalping on any time frame intraday.

Again, the key, as always, is persistence, discipline, experience, and an entry signal the trader is comfortable taking.

$UVXY – lighting a fuse for its next explosion…

File this under “history repeating slash history rhyming.”

The last time I posted a VIX ETF heads up was January 14TH ($TVIX – Just a heads up…), when TVIX was 40ish and UVXY was 10 something. Both, at the time of that post, were down eight days in a row in a falling wedge pattern, like UVXY is now (see the chart below).

I suggested at that time that whatever buy trigger came along it was going to come along soon and those leveraged ETFs were going to explode.

Three days later they popped nicely, not spectacularly but nicely, then backed off to retest the lows into early February. Then there was a another buy, triggered by a down turn in the NYSI, the longer-term breadth measure of the McClellan Oscillator, on February 19th.

And the VIX ETFs exploded.

UVXY went from under 11 to as high as 135. In two weeks. TVIX, which rocketed from 40 to a 1000, is no longer with us, having killed itself with success…well, extreme volatility.

The blast was driven by the onset of the Covid-19 pandemic in the United States. It started slow but with President Trump’s incompetence and his totally botching of this country’s response to the virus (calling it a “hoax”), it ran the major indexes down 36% in a few weeks.

The market has rallied back to the previous highs with Congress putting out a two-trillion-dollar stimulus that once again helped Wall Street but not much on Main Street, and with the Federal Reserve throwing money onto the market like gasoline on a bonfire.

Truly, it has been a market rally led by tech and irrational exuberance. Remarkably, the banks have been relative laggards in the rally, never a good sign for the market longer term.

So what now?

As yet, the market has not come to terms with how severely the economy has been damaged with double-digit unemployment, with a possible waves of evictions, with thirty/forty million people out of work, with relative consumer buying power in the shitter, with small businesses failing all over the place (YELP predicts sixty percent of restaurants will not recover). And now schools likely will not be able to fully open.

Even now the Trump Administration doesn’t have the slightest idea what to do, and Republican Senators are dickering with each other, holding up the Democratic rescue plan. Trump has returned to the coronavirus briefing podium to spout his lies and ignorance. Trump’s big botch goes on while the rest of the world has shown to varying degrees what should have been done.

Five million Americans have been infected and 170,000 have died (with both those numbers still rising fast). As the rest of the world continues to make progress against the pandemic (New Zealand has not had a new case now for 100 days), the United States, governed by not much more than an orangutan, continues to be a mind-boggling catastrophe.

What now? What now?!

This is just another heads up…like last time:

Watch UVXY. It will tell, and there will be money to be made there. It’s setting up another explosion. After these eight days down in a row it could come tomorrow or two weeks from now but it’s likely the fuse has been lit.

(click on the chart for a larger view)

$SPY #Options – #DayTrading calls on a FED day

The Federal Reserve announced its actions Wednesday in what was going be a foregone conclusion – nothing new, more to come.

So call that bullish.

CLOSING FIRST HALF:

CLOSING DAY TRADE:

$SPY #Options – #DayTrade on call Monday

The option day-trade play was the at-the-money 321 call for a 53% profit on one half and a 170% profit on the second half.

See tweets below for time stamps.

TRADING STRATEGY:

Buying SPY Puts And Calls

PROFITS ON HALF:

END OF THE DAY TRADE:

(Click on chart for a larger view)

#MarketTiming three tweets today from a yawn to the scream

THE YAWN TO THE SCREAM

END OF THE DAY

(CLICK ON THE CHARTS FOR A LARGER VIEW)

$SPY #Options – #DayTrading a day to “put” on the record

A day in the SPY 317 put, expiring Friday, 7/10.

FIRST TRADE HALF UP 53%:

EXIT SECOND HALF OFF 230%:

SECOND TRADE ENTRY:

FINAL EXIT HALF UP25%, SECOND HALF 12%:

#MarketTiming – To short the usual suspects…

The general market has had a dandy little bounce the last two days and may continue to the upside into the holiday weekend.

But sometimes in the endless quest to detect “what happens next” it is not what is happening, but instead it is what is not happening.

Since most stocks in most sectors rally with a rising mass market those that don’t usually get hit the hardest with the market turns.

Since I think all of the market’s rallies now are bounces to be sold until the biggest reward comes when the realization sets in that there is nothing supporting this supposed bull market except the fumes in the Fed’s liquidity tank, I’ve taken a look around to what is not bouncing.

Really took just a glance around.

Didn’t have to look much past the usual suspects, the airlines, cruise ships, theater chains, and coal. Those first three sectors are severely distressed by the pandemic in this the worst of times. Coal is always a short even in the best of times.

Take a look at the two-day charts below to see the lack of bounce these last two days in all of these stocks.

AIRLINES — AAL, ALK, DAL, LUV, UAL, and most importantly, BA. Hope springs eternal in this sector but it does not fly. ALK has canceled 130 flights so far and mothballed 30 airliners. AAL and UAL, in desperation, have said they will fill their flights to capacity while others have said they have eliminated middle seating in an attempt to social distance, but it is doubtful the hordes of passengers they packed in previous to the pandemic will return any time soon. They are going to lose money, maybe on every flight. BA rallied yesterday on news of 737 MAX re-certification tests as if anyone is going to want to order that plane anytime soon, especially since most airlines are in the process of canceling orders (Norwegian Airlines canceled 97 orders today).

CRUISE LINES – CCL, RCL, NCLH. What’s there to say further? Can cheaply offered luxury cancel the memories of being trapped on cruises of contagion and death while the charlatan President of the United States, no less, says he would rather have passengers die there than muck up his Coronavirus positive case counts on shore? And what’s it going to cost to hire crew members for those voyages, if any crew can be hired at all?

THEATER CHAINS – AMC, CNK (which now owns Regal, the largest chain in the US). These movie theaters have a chance to make adjustment to cope with social distancing but still…even for the biggest blockbuster offering it will be irresponsible to operate at more than 50% capacity (if not illegal in some states). How much profit margin is there in half a house?

COAL STOCKS – BTU, ARCH, SXC, CNX. Coal, no matter how many times Trump says he loves it, has no sustainable future. Just compare the stocks in the sector to the solar stocks. On the next leg down, it looks as if BTU particularly may once again wipe out shareholder equity with yet another bankruptcy filing.

It’s going to take some market timing to pick the entries for when these stocks break down again. For me that’s watching what NYMO and NYSI, as my prime measures of mass-market psychology, are doing, but I assume anyone capable to shorting has their own indicators to rely on.

Regardless, when the time comes, I’m looking to take the slide down in what has now become the USA’s continued botched-coronavirus-response carnival.

(click on the chart for a larger view)

$SPY #Options – #DayTrading Friday 6/26

Didn’t get around to compiling this blog entry Friday nor over the weekend. Was a bit numb from action of the day. Pleased, of course, since it was another dazzling day down to end the week.

Posting today (6/29) to as a record for this blog.

See the tweets below for the entries and results of the trades Friday:

FRIDAY’S 307 PUT AT 2.00. RESULTS: HALF UP 125%, SECOND HALF UP 175%.

FINAL TRADE FRIDAY’S 305 PUT AT 3.14. RESULTS; HALF UP 50%, SECOND HALF UP 63%.