Friday, April 15th, 2016

Index options trading

INDEX OPTIONS TRADING is brought to you by Dan Sheridan Courtesy CBOE-TV. Dan Sheridan is one of the best in the business regarding Index Options trading and Stock options trading. Here he gives away a free trade given the volatility that we are facing. My favorite.

The market blasted away 960 points in a spectacular rally after a nightmare on Wall Street in the past weeks. It happens when the markets have been plunging and creating devastating losses for the most Americans wiping out pension plans, 401Ks and other accounts.

After reviewing charts it looks like that the Indexes may have put a bottom here. There is a long tailed candle with a sharp spike on Friday close and a gapped up opening on Monday with a solid rocket booster climb up to 964 points, the single largest such move at least in 20 years by any index in memory.

Index options trading and Index options strategies should be back in vogue if this rally sustains itself and we find a follow through day- 4 days after today, where the markets and major indexes move up at least 1.5 to 2 percent with volumes greater than the day before. All major bull markets start this way. Bad markets and severe drops in indexes always signal for a new bull market. The crash of 1987 and in 2001 where major indexes showed horrific plunges only to recover nicely with huge gains.

This is an options expiration week and Index options trading would be hectic as index options expire on Thursday and Stock options on Friday. On top of that Earnings season begins this week and that could gyrate indexes and options into big moves. GOOG reports this Thursday when Index options expire.

Our index options trading has been put on halt due to these extraordinary circumstances. As we have been saying last 2 weeks Cash is king. This is the first day of rally attempt. Please be patient, let the markets and indexes prove to you that there is some upside trend. Trending markets are easier to trade. Its OK to miss the boat on first few days if this is going to be a sustainable rally, actually if it holds after day 4 according to Investors Business daily we shall celebrate it with a follow through day.

That’s when the markets are in confirmed rally mode and one can be certain about the directions and resume what we do here best – make money using Index options trading.


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