SPX trade follow up - final

Unless the market moves up off support quite a bit this morning this trade is all but dead. The weekend took out some time value and we will probably not be able to get a fill at $1.00 for the FEB 1450/1455 or even .50 for the 1460/1465 trade. Lets look for a March trade.

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Support and Resistance - 5th week January 2007

Every weekend I will give you the support and resistance levels and how strong they are of the folowing Indices…
QQQQ, SPX, OEX, the Dow (DJ30), and the Russell (RUT)
This will help you in trading decisions of where to be looking to place your trades.

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I removed SPY from my list since it pretty much follows the SPX and added RUT instead. This will become evident when we start discussing another way of trading credit spreads and iron condors. The Russell will be a good choice for this other way of trading.

Most of the indices are sitting right on support to start the week.

QQQQ - Support = 43.5 (43 stronger) / Resistance = 44.50 (45.50 stronger)
SPX - Support = 1420 (1400 stronger)  /  Resistance = 1440
OEX - Support = 660 (655  stronger) /   Resistance = 675 strong
DJ30 - Support = 12450 weak, stronger at 12350  /  Resistance = 12600 (12700 stronger)
RUT - Support = 780 (770 next level down) / Resistance = 795

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SPX trade follow up

I did not get my fill this morning on either of the SPX spread trades. It is early yet, I am going for the 1460/1465 spread trade intitially placed for .60. I may have to settle for .50 if the index rebounds at all today. DO NOT CHASE this index. Do not settle for the going rate right now of .25 it is not worth the risk, wait for a rebound and go for the .50 or .60 on the 1460/1465 and wait for the $1.00 for the 1450/1455 trade. We may not see it and this trade may get away from us. Let it go, there are more to be had…such as the March expirations!!!

I am going for the SPX FEB 1460/1465 because if resistance is broken at 1445 I have much more room to play with than the 5 points needed to break my 1450 short. It makes it a more conservative play, especially since we are breaking one of the rules of trading against the trend.

Right now I am reexamining volatility and I will have a discussion about how to trade with volatility in the next few days. Right now volatility is against us in this trade. We are trying to sell options for a credit, unfortunately the volatility on this index is low right now, bad for selling. The average volatility for the SPX is around 11 and right now we are around a 7 in volatility. More on this later.

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Profits taken now an SPX trade

The markets were hit big today, so now is the time to place a quick trade on the SPX using our resistance points as a guide.

The SPX has a strong resistance at 1445 and even though it is in an uptrend, now would be a good time to take advantage of today’s drop.

Currently the SPX closed at 1423 very near the weak support of 1420. I would expect a bounce tomorrow morning so we should get a fill on this trade.

A Bear Call Spread - sell the FEB SPX 1450/1455 for a credit of 1.00 or if you want to be extra cautious try the 1460/1465 level for .50 credit.

We would sell the FEB SPX 1450 call for $3.40 and buy the SPX 1455 call for $2.40 for a credit of $1.00 if the Index closes below this level at expiration we receive the full credit. This gives us a profit of 20%, a risk of $400 per contract with a profit of $100 per contract.

OR… we would sell the FEB SPX 1460 call for $1.50 and buy the FEB SPX 1465 for $1.00. If the index closes below 1460 after 20 days then we receive the full credit of .50 or a 10% profit in 20 days, but we are risking $450 per contract.

Easy trade with a high probability of success.

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