News & commentary on Stock Index Futures markets including S&P 500, NASDAQ, Dow Jones Industrial Average & more.
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Posted on 11/15/2012 7:49:55 AM by: Matt McKinney, Market Strategist @ Zaner. 312-277-0115.
TRADING COMMODITY FUTURES AND OPTIONS INVOLVES SUBSTANTIAL RISK OF LOSS AND IS NOT SUITABLE FOR ALL INVESTORS. YOU SHOULD CAREFULLY CONSIDER WHETHER TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES, KNOWLEDGE AND FINANCIAL RESOURCES.
OPTIONS PLAY: FISCAL CLIFF, IS NO JOKE IN MY OPINION
This Fiscal Cliff that is looming could lead large tax raises, no more unemplyment benefits, and business that will haveno reason to hire due to low consumer spending.
Fundamentally, one of three things could occur with the fiscal cliff looming, either tax hikes, benefit cuts, or "kicking the can down the road". With the holidays coming up I imagine congress will be taking their vacations, why not, they have not shown any urgency to this point. So the politicians of the U.S. will probably keep their vacation schedules and we will suffer. The only other option that could occur in my view is that for the first time in history a Democartic President and a Republican Congress could put their differences aside and solve the issue of the people like a democracy is supposed too. I just can't fugure out in my mind how this could be anything but bearish for the stock market. The way I short the stock market by buying put options on the e-mini s&p puts. More on that later.
Technically, below on this daily E-MINI S&p 500 chart according to my indicators the market is in a SUPER-TREND down, due to the fact that the 9 day SIMPLE MOVING AVERAGE (red line) has crossed under the 20 day SIMPLE MOVING AVERAGE (green line) while both indicators are pointing lower on fairly steep angles AND the market is trading below these SMA's. Now what you are left with is a chart that gives you very clear support and resistance levels. The first resistance is the 9 day SMA, the second area is the 20 day SMA, the thrid is the 50 day SMA, and the final area of resistance is the top line of the blue shaded area which is the BOLLINGER BANDS in my view according to my indicators. As far as support goes we are on it now-it's the bottom line of the BOLLINGER BANDS if we break below that, then we have to look at previous lows and different time frame charts. When I discuss charts and my technicals, always remember past performance is not indicative of future results.
DAILY ES CHART
PLEASE DO NOT PLACE ANY OF THESE ORDERS IN YOUR ACCOUNT WITHOUT SPEAKING TO ME FIRST, YOU CAN REACH ME WITH NO OBLIGATION AT 312-277-0115. LEAVE A MESSAGE AS I MAY BE ON ANOTHER CALL. I HAVE BEEN DOING THIS FOR 15 YEARS SO AS LONG AS I'M NOT PLACING TRADES FOR CURRENT CLIENTS I LIKE TO TALK ABOUT SOME OF MY TRADE IDEAS OVER THE PHONE.
A potential OPTIONS PLAY could be to sell deep out of the money ES Calls. Don't do this unless you speak to me first. This could be the riskiest play possible, and is not for everyone. At the same time it can be a slow and steady way to build your account. This type of trategy is not only very risky, but it requires discipline and patience. It aslo requires the guidance of a broker who has experience in this type of trading, in my opinion.
The other potential play here could be to buy ES put options, and for protection for every 3 puts we buy we will aslo buy a call. We do this in a 3 to 1 ratio so that if the market rallies significantly up then our puts will go down in value substantially, but if we have a call already in place it can go up in value and help us to live to fight another day. The 3 to 1 ratio is something I have tinkered with in buying options for 15 years and this one just seems to work the best. Although nothing works 100% of the time as we know.
THIS IS AN OPTIONS PLAY ARTICLE NOT DESIGNED FOR FUTURES. PLEASE DO NOT USE THIS ARTICLE AS A TRADE RECOMMENDATION TO TRADE FUTURES. I SPECIALIZE IN OPTIONS WHICH INVOVLES TIME VALUE, INTRINSIC VALUE, STRIKE PRICES, LEVERAGE FACTORS, EXPIRY DATES, PREMIUMS, AND MANY OTHER FACTORS THAT AREN'T RELATIVE TO FUTURES.
FREE QUOTE- "Rule No.1: Never lose money. Rule No.2: Never forget rule No.1" -Warren Buffett
Futures, options and forex trading is speculative in nature and involves substantial risk of loss. All known news and events have already been factored into the price of the underlying commodities discussed. The limited risk characteristic of options refers to long options only; and refers to the amount of the loss, which is defined as premium paid on the option(s) plus commissions.
FOR CUSTOMERS TRADING OPTIONS, THESE FUTURES CHARTS ARE PRESENTED FOR INFORMATIONAL PURPOSES ONLY. THEY ARE INTENDED TO SHOW HOW INVESTING IN OPTIONS CAN DEPEND ON THE UNDERLYING FUTURES PRICES; SPECIFICALLY, WHETHER OR NOT AN OPTION PURCHASER IS BUYING AN IN-THE-MONEY, AT-THE-MONEY, OR OUT-OF-THE-MONEY OPTION. FURTHERMORE, THE PURCHASER WILL BE ABLE TO DETERMINE WHETHER OR NOT TO EXERCISE HIS RIGHT ON AN OPTION DEPENDING ON HOW THE OPTION'S STRIKE PRICE COMPARES TO THE UNDERLYING FUTURE'S PRICE. THE FUTURES CHARTS ARE NOT INTENDED TO IMPLY THAT OPTION PRICES MOVE IN TANDEM WITH FUTURES PRICES. IN FACT, OPTION PRICES MAY ONLY MOVE A LITTLE.
Futures, options and forex trading is speculative in nature and involves substantial risk of loss. These recommendations are a solicitation for entering into derivatives transactions. All known news and events have already been factored into the price of the underlying derivatives discussed. From time to time persons affiliated with Zaner, or its associated companies, may have positions in recommended and other derivatives
Markets: Stock Index, Indices, Equities, New York Stock Exchange (NYSE), CME Group (CME), S & P 500, E-Mini S&P 500 (SP, $SPX, ES, .INX, SPY, .SPX), Nasdaq 100, E-Mini Nasdaq 100 (ND, NQ), Dow Jones Industrial Average, Dow Jones Industrial Average mini-sized (DJ, YM), Russell 2000 mini (RJ).
Futures, options and off-exchange retail foreign currency ("forex") trading is speculative in nature and involves substantial risk of loss. All known news and events have already been factored into the price of the underlying commodities discussed. Past performance is not necessarily indicative of future results.