Weekly Options Trade Watch 7/24/2014 – Weekly Theta
Disclaimer: This is not a recommendation to take a trade and is being provided for educational and informational purposes only. See the full disclaimer.
The S&P 500 has been grinding higher this week and made it up to new all time highs. The ATRts remains in a long state, but the market is now extended a bit beyond the standard deviation offset and there is not a valid trade for the Weekly Theta system.
Yesterday the SPX closed at 1987.01 and the SD offset level is down around 1973. In order for a trade to fit the parameters of the system, we would need to see a pretty significant pullback this morning. We’re a few hours ahead of the open as a write this and /ES futures are trading flat to slightly higher so it doesn’t seem likely that a pullback will take place, but anything is possible. There is some economic data being released this morning and that has the potential to move the market.
At this point, there is not a valid trade for the system because price is extended well beyond the SD offset. If price trades down below 1973, the system can take a trade. The reason the system uses the SD offset as a filter is to avoid situations where the market is over extended and has the potential for a sudden reversal.
2 thoughts on “Weekly Options Trade Watch 7/24/2014 – Weekly Theta”
“In order for a trade to fit the parameters of the system, we would need to see a pretty significant pullback this morning.”
I can sure use a pull back today…. I have an IC on and the call spread is too close for comfort!
It doesn’t seem like the markets want to head significantly lower this morning, but it can always change.
If it makes you feel any better Andrew, I have a SPX IC on that’s experiencing a little pressure on the call side as well. Fortunately, the long SPY positions I have are offsetting some of that pressure. We’ll just have to see how it all plays out . . .
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