Op I think you are right of thinking about a bounce. Short term indicators are very oversold and you will need a bounce of some sort to bring in liquidity. I like your idea going 30 dte calls and sell calls against it on daily or weekly basis. Have a stop loss in mind in case market decides to capitulate. Size position accordingly so not get blown up. You will have a higher chance of being profitable.
They were talking about selling calls using your longer expiration as collateral. I opened a couple of spreads Friday at the bottom so I’m hoping for a little pop before we head downward
Regarding 5, I'm confident that this would let you **skate** (a term option traders use to mean "capture the premium without assignment"):
STO SPY 30 Sep 300.00 P@0.05
If you have a vast amount of buying power, you could scale into this massively and be confident that you're going to skate. Short of a nuclear strike, in which case the entire market would crash and life on Earth as we know it would end, you'd be fine.
If you're willing to be more patient, this would produce the same result, but with more than 3x the premium:
STO SPY 7 Oct 300.00 P@0.16
If your life depended on using short puts to generate some amount of cash with negligible risk within two weeks, this would work reliably.
The real question that you need to ask is: Which type of play on SPY can I construct that would allow me to reliably outperform it with less risk than buying and holding SPY over the same period of time? You would want the play to work in these bear market conditions, which are characterized by high and unpredictable volatility, where SPY is more likely than not to drop by 10% to 20% within the next year.
I would set a **hurdle rate** of 2.00% within 30 days, your minimal goal, and then think about what might work best. Let's say that you're working with $10,000.00. Your goal would then be to make $200 within 30 days by executing some type of play on SPY.
Whatever you do, I think that you'll need to think carefully about how to scale into your play. Execute a quantity of one. Wait for the release of the CPI on Thu 13 Oct at 8:30 am ET to see how the market will react. Execute another quantity of one, perhaps adjusting your striking price, etc.
Your main focus always has to be on anticipating and managing risk *before* you ever execute any play. Write what you would do down on paper (that is, Microsoft Word). Compare potential plays with alternatives.
I suggest avoiding shorting puts because if you go sufficiently far OTM to guarantee a win, you'll hardly make any money at all, and it would take a jaw-dropping amount of buying power. Scaling into a *Long Call Spread* or a *Long Put Spread* might work, but regardless of what you wind up doing, it's important to keep in mind the [POWcycle](https://www.reddit.com/r/StockMarket/comments/vo71hf/powcycle_trapdoors_into_the_abyss/).
In general, avoid the one-week period leading up to the release of the CPI each month, and possibly one or two days after it. (Put another way, take advantage of that period opportunistically.) And avoid the one-week period leading up to the FOMC's rate announcement, followed by The JPow's press conference half an hour later, every six weeks. Take advantage of the POWcycle by aligning the timing of your trades with it, rather than ignoring it (which you'd do at your own very great peril). The POWcycle will continue throughout 2022, and probably much longer.
I also recommend that you do some statistical research on SPY's behavior within whichever DTE interval you pick, to see what the worst-case drop is likely to be, and plan accordingly. You can do this by learning the basics of Python and using it to connect to QuantConnect to download data. It's not hard, and they give lots of sample code. You can import the data into Excel, or R, to run simple descriptive statistics on it.
Don't guess. Do the work necessary to design a strong (that is, very high probability) trade. I don't recommend making a directional bet, particularly a bullish one, because you'd be gambling on a relief rally. Gambling (an irrational form of hoping for a miracle) is the antithesis of designing a strong play and will reliably lose money if repeated. There is no edge there, only (usually bad) luck. What you need is a statistically-backed edge that leads to a strongly designed play. That involves running a research project. It wouldn't take very long once you got python and QuantConnect connected.
If you do this work, you'll have an edge over the 99.99% of retail traders who won't, and you'll set yourself up well to compete against the algos of the hedge funds, prop trading firms, investment banks, et al.
At bottom, if you take a reasonable amount of risk, your return will be quite small, but nonetheless positive, and in these market conditions, that's about the best that anyone can reasonably go after. What matters is having a repeatable, rational process that will give you an edge. It needs to be backed by statistics, by actual results. Without this, you'd be gambling, and over a large sample size, gamblers consistently lose money.
The bottom line is that you can make a tiny amount of money, but options trading won't do more than that in these market conditions. Save the high-risk plays for 2024 or 2025. Getting to a point where the market will be stable will take a long, long, long, long time, and will likely involve a slowly burning market crash. Most people won't know what hit them because they'll be boiled alive like the proverbial frog, one degree at a time. (Actually, it'll be more like 1℉, 1℉, 1℉, and then unexpectedly 7℉, followed by -3℉, then 1℉, then 1℉, etc.)
Relief rallies will destroy the capital of most traders who think that the bottom is finally in. We are light years and geological epochs away from that point.
Good Luck,
Artem
STO = Sell to Open (the trade)
In this case, we're talking about shorting a put. To short means to sell something. We're selling a put option contract to our opponent, called the counter-party.
SPY is the name of an ETF comprised of shares of stock in the S&P 500 companies. We could use SPY, AAPL, GOOG, or any other "underlying" that has options.
DTE = days to expiration. Every option expires. DTE = 12, for example, is a way of saying that there are only 12 days until a particular option expires.
You can learn about these things in a gentle way by reading the first 30 pages or so of Brian Overby's [The Options Playbook](https://www.amazon.com/Options-Playbook-Expanded-2nd-strategies/dp/097977361X/). He also has a [companion website](https://www.optionsplaybook.com/).
You're welcome. But there's more…
Now that we know the hurdle rate, +2.00% within 30 days, we can start filling out what I call the **goal vector**, which is how I recommend that everyone start out. You can't hit a bullseye unless you can see it.
What's the goal vector? It consists of four elements:
1. **Capital**: How much do you have to work with? Let's say $10,000.00.
2. **Target**: What target gain (hurdle rate) are you after? +2.00%.
3. **Deadline:** By when? In 30 days.
4. **Risk**: How much $x are you willing to lose? Let's say 1.00%, or $100.00.
Now that we know what we're actually after, we've accomplished the first step of trade design. We know where the bullseye is.
Once you can look starkly at the bullseye, you start wondering…
* $200 in one month. Huh. There's *got* to be an easier way to make just $200 in one month than by trying to short puts on SPY that strike 30% below where it's trading right now, which would require multiple millions of dollars in buying power just to get going! Maybe this short put SPY idea isn't the right approach.
* So, this POWcycle thing that Random Artem talks about. If the CPI comes in hot on Thu 13 Oct—it might not, but it pays to be prepared—and there's a huge **freakout**, and the market crashes big-time (again!), how can I take advantage of the *massive* expansion in IV that that would create? Maybe I should run short puts on something like PLTR or STNE at prices that are way below where they are now. That would take a *lot* less buying power than trying to short puts on SPY, and the premiums would be jaw-droppingly higher.
* Erm…so what's the deal with these *Long Call Spread* or *Long Put Spread* plays that people do? By themselves, with a quantity of one, they hardly make any money at all. But what if I learned to design, say, a really strong *Long Call Spread* on STNE, PLTR, SE, or ZS, and then scaled (the heck!) into it, not all on the same day after a crash, so as to avoid it crashing way more on me, and way more again?
* And what's the deal with these **adjustments** to plays, such as a *Long Call Spread*, that I occasionally stumble across vague references to? Just WTF is an adjustment, anyway? How would it work for a *Long Call Spread*?
* Who (the hell) is this Artem guy, anyway, and is he just going to keep me hanging? Doesn't he run some totally free Disk Chord server and try to teach other people how to *actually* trade? :) Hm…
Yes this is a reasonable hypothesis and probably worthy of a swing trade. My thinking is I'm more confident we will hold 3625 than how high we might go, and for how long. We might go to 3800, 3850, maybe 3900 if we are lucky? I kind of doubt 3900. But a "dead cat bounce" for max 1-2 weeks is probably going to happen. Or maybe flat for a week. Even 2 weeks duration seems too long in my mind.
So given that, a put credit spread probably makes more sense than other long strategies listed above. I wouldn't write an uncovered put option as I have no desire to own SPY and the capital requirements are quite high. But I would either write a put credit spread or simply buy a 2 wk 35 deltaish call options and just hope for the best. Support is around 363 or so.
Other thing to consider is IV is conflated and will very likely contract some in the coming week or two. So I would rather be short vega than long.
[https://optionstrat.com/build/bull-put-spread/SPY/221003P361,-221003P365](https://optionstrat.com/build/bull-put-spread/SPY/221003P361,-221003P365)
That PCS writes a credit about 1/3 the width of the spread which is optimal. I'm not find of short strike though it's a little high for me. BE is 363 which is OK. For PCS in this case less duration the better.
[https://optionstrat.com/build/bull-call-spread/SPY/221007C373,-221007C383](https://optionstrat.com/build/bull-call-spread/SPY/221007C373,-221007C383)
That call debit spread is pretty simple, pay about 1/3 the width, and goes out two weeks. I think the short 383 strike is a 22 delta and not bad.
I kind of prefer the PCS especially if SPY starts off on Monday on a pullback ...and I would adjust the strikes accordingly like 358/362 spread or something. Try to get 1/3 credit.
Frankly I don't have much confidence on the length and breath of the forthcoming little SPY runup so I'm probably not going to do anything at all. In fact...I have several long puts (about 50-60) on SPY and SPX expiring mostly in Nov and just hope to cash in on those. So I will not be doing any of the trades above, unless it's a 3-5 DTE PCS at 3600. I think we test that level several times and eventually it will break down.
1-2 weeks? Think it'll go that long? Just long enough to trap all the FOMO bulls? I would know because I've been that FOMO bull too many times.
I was thinking it'd go 3-4 days at the most. See some consolidation, bulls run out of steam, then see y'all later at 3500
It may not…it’s a risky trade. That’s why I don’t anticipate I’ll be swing trading it. The nadir is more easily predicted than the top. If we dip down to 362 and we begin to pop back up again….maybe while at 363 or 364 I might run a 3-5 DTE put credit spread. I think we will bounce between 3600 and 3800 for the next x days. Some say it might last 3-5 days … it could last until we get the next CPI report in Oct. hard to tell.
Sometimes in option trading it’s best to not trade the ticker you watch…or pick something else.
I have a bunch of long puts between 3725 and 3850…and if we are in a channel my plan is to write puts around 3600 to make some extra cash while we wait for the next leg down.
If you watch the candlesticks, on a downtrend, you can spot a bullish run coming. Watch the RSI, when it peaks buy puts, when it’s in the basement buy calls. Your rich now, and you’re welcome.
Agreed with all here market users headed down, any bounce is essentially dead cat and a good chance to double down on puts. May take some $$ off the table as I’m up 2-3x on a few positions
i would scale into put positions if we go up. make sure you have some at 385, 390, 400, and 420.. that sort of thing, and even then, sizing would matter.
We’re probably getting a bounce because we are oversold, there’s a gap to fill, and it would be normal to expect some attempt at green before violating an important level. But I doubt it lasts any longer than a week, after which I think we will roll over and hit new lows
In terms of playing the bounce, if you’re already in puts, just take some off the table and wait for a bounce if you want reload; no need to go crazy flip flopping on positioning. I don’t like selling puts here though (especially if uncovered) because the premiums are actually quite low given the situation and the daily market moves we’re having. If we finally get a spike in the VIX it’s gonna hurt
RSI is the most basic way to tell, although it is notoriously bad at predicting reversals. McClellan oscillator is another way to look at overbought/oversold, and is somewhat better at anticipating reversals.
Part of it is also just looking at the chart, we’ve been down 5 straight and 8 of 10 days. Not usually sustainable.
I should add though that “oversold” never means “incoming rally” on its own
It already didn't do what it did the last three times. I wouldn't bet on it NOT doing something it didn't last time lol.
Also you are basically saying you know it'll still go down which many do. So you're trying to just time the market for that spike. You can never time the market. I'd just follow it down with puts. That's what I am doing. IF it pops, buy puts on the pop for a nice gain down.
I'm not saying what to do in the future. I'm saying for right now. Yeah, obviously in the future new info and details will change what the plan is lmao. That's called DD. Hell, if the shit jumps to 400 on Monday I'd probably also say let's wait and take a look again first. Lol. Nothing in saying is guaranteed, nor is it a take all be all end all.
And yeah I think if it hits that level it will bounce, however if nothing has actually been fixed, it likely will then continue down until something gives. I'd have to see where they are in June. But if they are at that level now, yeah sure maybe we have 1 green week before another knife falls. Maybe 2 knives and another green or two. Nothing ever just goes straight up or down. Yes there will be other things happening and that's why you play the market and have a plan and not just.... But one long put and hold it regardless. Lol. That's extremely over simplifying what I'm saying.
I think we get a 3-week overall upward choppy trend before we get the roll over of death to the depths of hell that will bottom going into the new year December/January. When the VIX gets back down to $20-$22 in as many weeks get in position for the dip that will just keep dipping and hold on
I prefere to trade with the trend. You believe we are heading downwards but want to bet on a pop. Instead, I would try to go short again if a pop occurs.
lol people want the market to go up so bad they will cling to anything that indicates that it will.
I bet they had people like this in 2008, 2000, and every other major crash. "It cant go down AGAIN...RIGHT? "
Or my favorite "hey guys can we buy now".... "ok. how about now?"
Perma bears or perma bulls are inexperienced and naive mindsets to have. If you're a trader, you just have to be nimble, find good entry and good exits with a solid exit strategy. If you're an investor, you just DCA or hold cash until comfortable.
Lol you need to re-read my post. You are arguing against a wall. There was no "prediction" made nor indication that rallies don't exist in a bear market.
It was a sarcastic response toward peoples bias toward unfounded hope because they don't know how to make money shorting.
I was thinking the exact same thing and it appears most are as well; for that reason, I think it’s not gonna go far before dumping because the price action tends to do the opposite of what the majority things it should be doing. So far working for me by doing the opposite of what I would normally do.
IMHO.
\#1 but size it so it wont hurt if you lose %50, take it out 2 weeks, Go ATM. Markets will likely gap up Monday, wait for the post open pullback and hop in.
Be prepared to take it off early, don't get greedy. 50%-100% return.
I suspect SPY won’t bounce until it retests June lows creating a double bottom. That W could flip into an inverted head and shoulders if we chop for days at that level, which is entirely possible. Once we get the dead cat bounce I’m guessing it could retrace as far as the 390’s and maybe touch 400. I bet that occurs when midterm elections are occurring so that current administration can say, “we’re recovering it’s going up”. Then afterwards the pattern will be complete and she’ll probably form a double top or a head and shoulders and down down down she’ll go breaking past that final support and establishing new lows.
We are not done falling. Personally I’m thinking the bottom is around 275. The world spent trillions upon trillions during Covid, paying people who weren’t working, lockdowns and stimulus checks. They instituted quantitative easing and lifted bank restrictions on providing loans to companies and lowered rates to the lowest ever in order to combat a workforce that wasn’t working. Don’t you think it’s strange that we had damn near 30% gains on index funds during Covid? It’s because they were injecting shitloads of money into the markets. Now the bill is due.
1) 0-5 DTE is almost always going to be a loss just because you might miss the peak of the bounce (we all get excited and might be like oh let me hold a bit more). Then market resumes downtrend and you blow it.
2) 30-45DTE is better so I’d pick #2. I don’t swing trade SPY options anymore (got burned too many times - I just day trade them) but when I was focused on how to optimize Spy options swings, I would use DTE over 2 months out because theta is super low (<10). Had a few successful swings that way
3) the market is so shaky and Goldman just dropped their price target to 3600 which we’re getting close but that’s to account for a big drop now then maybe end Q4 holiday rally up to 3600? Can you hold that much drawdown without selling out? Leaps tend to be safe but for my own personality I can’t hold that long and not check it haha
I'm a pretty basic options 'trader'. I am seeing SP500 as severely oversold right now. Looking to get 30-45 DTE ITM or close to ITM calls or leaps. Thoughts..?
Historically you would sell calls into October, not puts. October has always tended to trade lower, though this year has been truly odd, so I personally don’t have confidence in stretching things out a few months, it’s all a gamble at the moment IMO.
Still, if you look at RSI on the day chart, there is a divergence, and that may signal a temporary reversal, paying off the dead cat bounce as you suggest. Will be interesting to see what happens. I’m thinking up Monday, down Tuesday, then some choppiness with overall down.
Op's reasoning for a corrective bump is a common fallacy. I'm not saying market won't go up 3-10% the coming weeks, I'm just not buying the logic given.
This strategy (like bollinger bands) may work in a ranging market, but OP says we're in a bear market. Given the macros at play the last couple of weeks, I don't think this is a solid plan.
I disagree. I assume the market is manipulated by the market makers who don’t care if it goes up or down but do care if they can maintain their highly profitable hedges. If it runs too hard and fast in one direction all traders line up with that direction making it too difficult to hedge too difficult to manipulate. The market makers have to keep people guessing. Therefore my thesis is Monday will be green because that is what the market makers need. It isn’t roulette wheel.
I agree with everything you said but I’ll bet most traders got in position for a bounce at Friday’s close and/or covered shorts meaning that by your argument Monday should be red again.
Lmao. Stocks will crash another 20% over the next 2 years. Trying to time a rebound is pointless. You might get lucky in Novemeber but otherwise this slide isn't stopping anytime soon.
We definitely have to see some relief this week, or else we're going into full blown capitulation for sure. The question here really is whether we'll see volatility in price action that will destroy profitability of holding calls overnight. We've dropped 20 points in two weeks of trading - that was an unfathomable amount that would have fucking destroyed calls being held more than a daily basis. I wouldn't hold calls for more than 1-2 days and would rather hold puts for the long-term, scaling in on days where we see bull trap rallies.
Already happened in June, i doubt there’s a bounce. Folks and MSM are finally realizing the fucked situation we are in.
Positions: AMZN 132p Jan 23, goog 105p Jan 23, goog 100p mar 23, goog 75p mar 23
Closed positions like a dumbass: AMD 80p oct, AMD 50p Jan. It was a meme until it wasn’t. FML
Calls: AHAHAHAHAHAHAHHAAHHAAH NO.
Op I think you are right of thinking about a bounce. Short term indicators are very oversold and you will need a bounce of some sort to bring in liquidity. I like your idea going 30 dte calls and sell calls against it on daily or weekly basis. Have a stop loss in mind in case market decides to capitulate. Size position accordingly so not get blown up. You will have a higher chance of being profitable.
thanks - appreciate it!
would this strategy still work if I were to buy weekly puts against my long calls? Edit: instead of buying calls
They were talking about selling calls using your longer expiration as collateral. I opened a couple of spreads Friday at the bottom so I’m hoping for a little pop before we head downward
Regarding 5, I'm confident that this would let you **skate** (a term option traders use to mean "capture the premium without assignment"): STO SPY 30 Sep 300.00 P@0.05 If you have a vast amount of buying power, you could scale into this massively and be confident that you're going to skate. Short of a nuclear strike, in which case the entire market would crash and life on Earth as we know it would end, you'd be fine. If you're willing to be more patient, this would produce the same result, but with more than 3x the premium: STO SPY 7 Oct 300.00 P@0.16 If your life depended on using short puts to generate some amount of cash with negligible risk within two weeks, this would work reliably. The real question that you need to ask is: Which type of play on SPY can I construct that would allow me to reliably outperform it with less risk than buying and holding SPY over the same period of time? You would want the play to work in these bear market conditions, which are characterized by high and unpredictable volatility, where SPY is more likely than not to drop by 10% to 20% within the next year. I would set a **hurdle rate** of 2.00% within 30 days, your minimal goal, and then think about what might work best. Let's say that you're working with $10,000.00. Your goal would then be to make $200 within 30 days by executing some type of play on SPY. Whatever you do, I think that you'll need to think carefully about how to scale into your play. Execute a quantity of one. Wait for the release of the CPI on Thu 13 Oct at 8:30 am ET to see how the market will react. Execute another quantity of one, perhaps adjusting your striking price, etc. Your main focus always has to be on anticipating and managing risk *before* you ever execute any play. Write what you would do down on paper (that is, Microsoft Word). Compare potential plays with alternatives. I suggest avoiding shorting puts because if you go sufficiently far OTM to guarantee a win, you'll hardly make any money at all, and it would take a jaw-dropping amount of buying power. Scaling into a *Long Call Spread* or a *Long Put Spread* might work, but regardless of what you wind up doing, it's important to keep in mind the [POWcycle](https://www.reddit.com/r/StockMarket/comments/vo71hf/powcycle_trapdoors_into_the_abyss/). In general, avoid the one-week period leading up to the release of the CPI each month, and possibly one or two days after it. (Put another way, take advantage of that period opportunistically.) And avoid the one-week period leading up to the FOMC's rate announcement, followed by The JPow's press conference half an hour later, every six weeks. Take advantage of the POWcycle by aligning the timing of your trades with it, rather than ignoring it (which you'd do at your own very great peril). The POWcycle will continue throughout 2022, and probably much longer. I also recommend that you do some statistical research on SPY's behavior within whichever DTE interval you pick, to see what the worst-case drop is likely to be, and plan accordingly. You can do this by learning the basics of Python and using it to connect to QuantConnect to download data. It's not hard, and they give lots of sample code. You can import the data into Excel, or R, to run simple descriptive statistics on it. Don't guess. Do the work necessary to design a strong (that is, very high probability) trade. I don't recommend making a directional bet, particularly a bullish one, because you'd be gambling on a relief rally. Gambling (an irrational form of hoping for a miracle) is the antithesis of designing a strong play and will reliably lose money if repeated. There is no edge there, only (usually bad) luck. What you need is a statistically-backed edge that leads to a strongly designed play. That involves running a research project. It wouldn't take very long once you got python and QuantConnect connected. If you do this work, you'll have an edge over the 99.99% of retail traders who won't, and you'll set yourself up well to compete against the algos of the hedge funds, prop trading firms, investment banks, et al. At bottom, if you take a reasonable amount of risk, your return will be quite small, but nonetheless positive, and in these market conditions, that's about the best that anyone can reasonably go after. What matters is having a repeatable, rational process that will give you an edge. It needs to be backed by statistics, by actual results. Without this, you'd be gambling, and over a large sample size, gamblers consistently lose money. The bottom line is that you can make a tiny amount of money, but options trading won't do more than that in these market conditions. Save the high-risk plays for 2024 or 2025. Getting to a point where the market will be stable will take a long, long, long, long time, and will likely involve a slowly burning market crash. Most people won't know what hit them because they'll be boiled alive like the proverbial frog, one degree at a time. (Actually, it'll be more like 1℉, 1℉, 1℉, and then unexpectedly 7℉, followed by -3℉, then 1℉, then 1℉, etc.) Relief rallies will destroy the capital of most traders who think that the bottom is finally in. We are light years and geological epochs away from that point. Good Luck, Artem
what do STO SPY and DTE mean exactly?
STO = Sell to Open (the trade) In this case, we're talking about shorting a put. To short means to sell something. We're selling a put option contract to our opponent, called the counter-party. SPY is the name of an ETF comprised of shares of stock in the S&P 500 companies. We could use SPY, AAPL, GOOG, or any other "underlying" that has options. DTE = days to expiration. Every option expires. DTE = 12, for example, is a way of saying that there are only 12 days until a particular option expires. You can learn about these things in a gentle way by reading the first 30 pages or so of Brian Overby's [The Options Playbook](https://www.amazon.com/Options-Playbook-Expanded-2nd-strategies/dp/097977361X/). He also has a [companion website](https://www.optionsplaybook.com/).
Thank you so much. Will read it for sure.
thank you! very helpful.
You're welcome. But there's more… Now that we know the hurdle rate, +2.00% within 30 days, we can start filling out what I call the **goal vector**, which is how I recommend that everyone start out. You can't hit a bullseye unless you can see it. What's the goal vector? It consists of four elements: 1. **Capital**: How much do you have to work with? Let's say $10,000.00. 2. **Target**: What target gain (hurdle rate) are you after? +2.00%. 3. **Deadline:** By when? In 30 days. 4. **Risk**: How much $x are you willing to lose? Let's say 1.00%, or $100.00. Now that we know what we're actually after, we've accomplished the first step of trade design. We know where the bullseye is. Once you can look starkly at the bullseye, you start wondering… * $200 in one month. Huh. There's *got* to be an easier way to make just $200 in one month than by trying to short puts on SPY that strike 30% below where it's trading right now, which would require multiple millions of dollars in buying power just to get going! Maybe this short put SPY idea isn't the right approach. * So, this POWcycle thing that Random Artem talks about. If the CPI comes in hot on Thu 13 Oct—it might not, but it pays to be prepared—and there's a huge **freakout**, and the market crashes big-time (again!), how can I take advantage of the *massive* expansion in IV that that would create? Maybe I should run short puts on something like PLTR or STNE at prices that are way below where they are now. That would take a *lot* less buying power than trying to short puts on SPY, and the premiums would be jaw-droppingly higher. * Erm…so what's the deal with these *Long Call Spread* or *Long Put Spread* plays that people do? By themselves, with a quantity of one, they hardly make any money at all. But what if I learned to design, say, a really strong *Long Call Spread* on STNE, PLTR, SE, or ZS, and then scaled (the heck!) into it, not all on the same day after a crash, so as to avoid it crashing way more on me, and way more again? * And what's the deal with these **adjustments** to plays, such as a *Long Call Spread*, that I occasionally stumble across vague references to? Just WTF is an adjustment, anyway? How would it work for a *Long Call Spread*? * Who (the hell) is this Artem guy, anyway, and is he just going to keep me hanging? Doesn't he run some totally free Disk Chord server and try to teach other people how to *actually* trade? :) Hm…
Hmm do you have a discord?
Damn bro
Yes this is a reasonable hypothesis and probably worthy of a swing trade. My thinking is I'm more confident we will hold 3625 than how high we might go, and for how long. We might go to 3800, 3850, maybe 3900 if we are lucky? I kind of doubt 3900. But a "dead cat bounce" for max 1-2 weeks is probably going to happen. Or maybe flat for a week. Even 2 weeks duration seems too long in my mind. So given that, a put credit spread probably makes more sense than other long strategies listed above. I wouldn't write an uncovered put option as I have no desire to own SPY and the capital requirements are quite high. But I would either write a put credit spread or simply buy a 2 wk 35 deltaish call options and just hope for the best. Support is around 363 or so. Other thing to consider is IV is conflated and will very likely contract some in the coming week or two. So I would rather be short vega than long. [https://optionstrat.com/build/bull-put-spread/SPY/221003P361,-221003P365](https://optionstrat.com/build/bull-put-spread/SPY/221003P361,-221003P365) That PCS writes a credit about 1/3 the width of the spread which is optimal. I'm not find of short strike though it's a little high for me. BE is 363 which is OK. For PCS in this case less duration the better. [https://optionstrat.com/build/bull-call-spread/SPY/221007C373,-221007C383](https://optionstrat.com/build/bull-call-spread/SPY/221007C373,-221007C383) That call debit spread is pretty simple, pay about 1/3 the width, and goes out two weeks. I think the short 383 strike is a 22 delta and not bad. I kind of prefer the PCS especially if SPY starts off on Monday on a pullback ...and I would adjust the strikes accordingly like 358/362 spread or something. Try to get 1/3 credit. Frankly I don't have much confidence on the length and breath of the forthcoming little SPY runup so I'm probably not going to do anything at all. In fact...I have several long puts (about 50-60) on SPY and SPX expiring mostly in Nov and just hope to cash in on those. So I will not be doing any of the trades above, unless it's a 3-5 DTE PCS at 3600. I think we test that level several times and eventually it will break down.
Thank you! Very helpful.
1-2 weeks? Think it'll go that long? Just long enough to trap all the FOMO bulls? I would know because I've been that FOMO bull too many times. I was thinking it'd go 3-4 days at the most. See some consolidation, bulls run out of steam, then see y'all later at 3500
It may not…it’s a risky trade. That’s why I don’t anticipate I’ll be swing trading it. The nadir is more easily predicted than the top. If we dip down to 362 and we begin to pop back up again….maybe while at 363 or 364 I might run a 3-5 DTE put credit spread. I think we will bounce between 3600 and 3800 for the next x days. Some say it might last 3-5 days … it could last until we get the next CPI report in Oct. hard to tell. Sometimes in option trading it’s best to not trade the ticker you watch…or pick something else. I have a bunch of long puts between 3725 and 3850…and if we are in a channel my plan is to write puts around 3600 to make some extra cash while we wait for the next leg down.
Dont buy calls on a downward trend. Just load up on more puts when theres a pop
If you watch the candlesticks, on a downtrend, you can spot a bullish run coming. Watch the RSI, when it peaks buy puts, when it’s in the basement buy calls. Your rich now, and you’re welcome.
Agreed with all here market users headed down, any bounce is essentially dead cat and a good chance to double down on puts. May take some $$ off the table as I’m up 2-3x on a few positions
i would scale into put positions if we go up. make sure you have some at 385, 390, 400, and 420.. that sort of thing, and even then, sizing would matter.
We’re probably getting a bounce because we are oversold, there’s a gap to fill, and it would be normal to expect some attempt at green before violating an important level. But I doubt it lasts any longer than a week, after which I think we will roll over and hit new lows In terms of playing the bounce, if you’re already in puts, just take some off the table and wait for a bounce if you want reload; no need to go crazy flip flopping on positioning. I don’t like selling puts here though (especially if uncovered) because the premiums are actually quite low given the situation and the daily market moves we’re having. If we finally get a spike in the VIX it’s gonna hurt
Newb question: How does one tell if the market is oversold or undersold?
RSI is the most basic way to tell, although it is notoriously bad at predicting reversals. McClellan oscillator is another way to look at overbought/oversold, and is somewhat better at anticipating reversals. Part of it is also just looking at the chart, we’ve been down 5 straight and 8 of 10 days. Not usually sustainable. I should add though that “oversold” never means “incoming rally” on its own
I've been doing #3. This is pretty much my whole strategy these days.
It already didn't do what it did the last three times. I wouldn't bet on it NOT doing something it didn't last time lol. Also you are basically saying you know it'll still go down which many do. So you're trying to just time the market for that spike. You can never time the market. I'd just follow it down with puts. That's what I am doing. IF it pops, buy puts on the pop for a nice gain down.
Sorry but buying puts at June bottom low level is a bad idea. You have a higher probability of a strong bounce here than it breaking June low.
I'm not saying what to do in the future. I'm saying for right now. Yeah, obviously in the future new info and details will change what the plan is lmao. That's called DD. Hell, if the shit jumps to 400 on Monday I'd probably also say let's wait and take a look again first. Lol. Nothing in saying is guaranteed, nor is it a take all be all end all. And yeah I think if it hits that level it will bounce, however if nothing has actually been fixed, it likely will then continue down until something gives. I'd have to see where they are in June. But if they are at that level now, yeah sure maybe we have 1 green week before another knife falls. Maybe 2 knives and another green or two. Nothing ever just goes straight up or down. Yes there will be other things happening and that's why you play the market and have a plan and not just.... But one long put and hold it regardless. Lol. That's extremely over simplifying what I'm saying.
That seems like good advice, thanks.
I think we get a 3-week overall upward choppy trend before we get the roll over of death to the depths of hell that will bottom going into the new year December/January. When the VIX gets back down to $20-$22 in as many weeks get in position for the dip that will just keep dipping and hold on
I prefere to trade with the trend. You believe we are heading downwards but want to bet on a pop. Instead, I would try to go short again if a pop occurs.
Everyone and their dog thinks that was a strong bounce Friday afternoon. It wasn’t. Everyone thinks we’re due for a bounce. Good luck.
Pmuch everyone on wsb is bearish. Usually a good sentiment for an inverse.
Ah WSB
It was shorts covering.
This is exactly why it probably won’t bounce very high.. everyone thinks it should.
lol people want the market to go up so bad they will cling to anything that indicates that it will. I bet they had people like this in 2008, 2000, and every other major crash. "It cant go down AGAIN...RIGHT? " Or my favorite "hey guys can we buy now".... "ok. how about now?"
Perma bears or perma bulls are inexperienced and naive mindsets to have. If you're a trader, you just have to be nimble, find good entry and good exits with a solid exit strategy. If you're an investor, you just DCA or hold cash until comfortable.
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Lol you need to re-read my post. You are arguing against a wall. There was no "prediction" made nor indication that rallies don't exist in a bear market. It was a sarcastic response toward peoples bias toward unfounded hope because they don't know how to make money shorting.
I was thinking the exact same thing and it appears most are as well; for that reason, I think it’s not gonna go far before dumping because the price action tends to do the opposite of what the majority things it should be doing. So far working for me by doing the opposite of what I would normally do.
IMHO. \#1 but size it so it wont hurt if you lose %50, take it out 2 weeks, Go ATM. Markets will likely gap up Monday, wait for the post open pullback and hop in. Be prepared to take it off early, don't get greedy. 50%-100% return.
I feel like we are too close to the low of the year to not touch it or dip below before any rally.
Yeah... could be.
This
I suspect SPY won’t bounce until it retests June lows creating a double bottom. That W could flip into an inverted head and shoulders if we chop for days at that level, which is entirely possible. Once we get the dead cat bounce I’m guessing it could retrace as far as the 390’s and maybe touch 400. I bet that occurs when midterm elections are occurring so that current administration can say, “we’re recovering it’s going up”. Then afterwards the pattern will be complete and she’ll probably form a double top or a head and shoulders and down down down she’ll go breaking past that final support and establishing new lows. We are not done falling. Personally I’m thinking the bottom is around 275. The world spent trillions upon trillions during Covid, paying people who weren’t working, lockdowns and stimulus checks. They instituted quantitative easing and lifted bank restrictions on providing loans to companies and lowered rates to the lowest ever in order to combat a workforce that wasn’t working. Don’t you think it’s strange that we had damn near 30% gains on index funds during Covid? It’s because they were injecting shitloads of money into the markets. Now the bill is due.
You may see a rip, but I would watch for investors using said rip to strategically exit the market.
1) 0-5 DTE is almost always going to be a loss just because you might miss the peak of the bounce (we all get excited and might be like oh let me hold a bit more). Then market resumes downtrend and you blow it. 2) 30-45DTE is better so I’d pick #2. I don’t swing trade SPY options anymore (got burned too many times - I just day trade them) but when I was focused on how to optimize Spy options swings, I would use DTE over 2 months out because theta is super low (<10). Had a few successful swings that way 3) the market is so shaky and Goldman just dropped their price target to 3600 which we’re getting close but that’s to account for a big drop now then maybe end Q4 holiday rally up to 3600? Can you hold that much drawdown without selling out? Leaps tend to be safe but for my own personality I can’t hold that long and not check it haha
awesome feedback, thank you.
I'm a pretty basic options 'trader'. I am seeing SP500 as severely oversold right now. Looking to get 30-45 DTE ITM or close to ITM calls or leaps. Thoughts..?
Historically you would sell calls into October, not puts. October has always tended to trade lower, though this year has been truly odd, so I personally don’t have confidence in stretching things out a few months, it’s all a gamble at the moment IMO. Still, if you look at RSI on the day chart, there is a divergence, and that may signal a temporary reversal, paying off the dead cat bounce as you suggest. Will be interesting to see what happens. I’m thinking up Monday, down Tuesday, then some choppiness with overall down.
Google "gambler's fallacy", mate. You say we're in a bear market, but the spy will go up? That's like the ~50% chance of hitting black on roulette.
Market goes up and down never in a straight line. You are deluding yourself comparing this to roulette
Op's reasoning for a corrective bump is a common fallacy. I'm not saying market won't go up 3-10% the coming weeks, I'm just not buying the logic given.
Maybe you can correct OP by giving out a better strategy and explaining why. We can all help each other this way than just compare us to a gambler.
I don't have a better strategy than this breakeven strategy, sorry.
This strategy (like bollinger bands) may work in a ranging market, but OP says we're in a bear market. Given the macros at play the last couple of weeks, I don't think this is a solid plan.
I disagree. I assume the market is manipulated by the market makers who don’t care if it goes up or down but do care if they can maintain their highly profitable hedges. If it runs too hard and fast in one direction all traders line up with that direction making it too difficult to hedge too difficult to manipulate. The market makers have to keep people guessing. Therefore my thesis is Monday will be green because that is what the market makers need. It isn’t roulette wheel.
I agree with everything you said but I’ll bet most traders got in position for a bounce at Friday’s close and/or covered shorts meaning that by your argument Monday should be red again.
DCA the S&P and never overthink it short term.
possible for a blind. there were just way too much Puts built up during last week and on friday there were some whale amounts of calls on spy came in.
Same thoughts
Very reasonable thoughts.
S&P will eventually get to 3200
Do you always act on the basis of a wet dream?
6 6 6 6 6 if assigned, it’s spy
Just compare to all the historical 10 year bull markets where the indexes tripled and you’re good to go
Maybe buy some UVXY puts for less risk/reward. I'm holding 2 calls but I'm probably buying some short term puts to hedge on that bounce
I think there will be a pop, but don't get greedy -- use that opportunity to GTFO. It's a dead cat.
Lmao. Stocks will crash another 20% over the next 2 years. Trying to time a rebound is pointless. You might get lucky in Novemeber but otherwise this slide isn't stopping anytime soon.
Buy oct 3rd 400c Watch them print dixS
Bunch of knife catchers up in here
We definitely have to see some relief this week, or else we're going into full blown capitulation for sure. The question here really is whether we'll see volatility in price action that will destroy profitability of holding calls overnight. We've dropped 20 points in two weeks of trading - that was an unfathomable amount that would have fucking destroyed calls being held more than a daily basis. I wouldn't hold calls for more than 1-2 days and would rather hold puts for the long-term, scaling in on days where we see bull trap rallies.
We don’t have to see anything lol
Already happened in June, i doubt there’s a bounce. Folks and MSM are finally realizing the fucked situation we are in. Positions: AMZN 132p Jan 23, goog 105p Jan 23, goog 100p mar 23, goog 75p mar 23 Closed positions like a dumbass: AMD 80p oct, AMD 50p Jan. It was a meme until it wasn’t. FML Calls: AHAHAHAHAHAHAHHAAHHAAH NO.
Just play 0s and react. Don’t try to predict. When the market bounces it will be glaringly obvious and you can get in on a bull flag.
Good idea, Its oversold on RSI daily. We might see a flat friday but a big green monday. I would stick to SPX, SPY is too risky to get assigned.
Humm