Sell in May and Go Away
June 9, 2007 by Daniel Beatty
The old adage sell in May and Go Away is a statement about the trend that stocks do not fair well during the summer months from May 1st through October 31st - called the Summer Doldrums. Historically you would make more money if you traded the indices by selling in May and then buying back in Novemeber 1st. Well this year so far has been a little different, except for the last few days we have not seen any significant down turn in the markets. Even now we had three days of the bear only to be brought back today in a large fashion.
Now two things here are really shaping up to make for better credit spread trades.
1.) If the summer doldrums occur since this year seems to be less of a bear we should get a choppy market stuck in a channel. This is great for credit spreads.
2.) the last few days have really brought the volatility up so premiums should be better. If this market starts to chop and continues in this fashion we should be able to place some good spread trades.
Andrew Crowder seems to agree…check out his post from a couple of days ago - What about a neutral based strategy now? The “Summer Doldrums†are typically the time to at least consider the notion.
credit option spread, credit spreads, neutral, summer doldrums
iron condor may be useful. it is “dual” credit spread so you may introduce this strategy here. anyway i have waited so long for your credit spread part 2 - how to find suitable optionable stock. i believe a lot of us would like to know how you find them.
happy trading