The March Mini S&P Index is down 1 point at 1121.00 this morning as I write. The included chart shows that the S&P index continues to steadily work its way higher in price. This slow pace of a rally is driving some analysts nuts as they have all be expecting and hoping for a 10% or more correction for months, only to see small pull backs that lead toward rallies to higher highs. I believe that this current rally in the stock market will continue until most of these for mentioned analysts finally throw in the towel and get long. Major market turns or major corrections usually happen when not many people are looking for them, or when investors become so complacent that they say they aren’t worried about a correction because they are confident that they will just buy more stocks before the stock go higher in price. That is certainly not the case right now which leads me to believe that higher stock prices are ahead for awhile until the psychology changes. A major news event could always change everything, but trying to trade markets on major, rarely occurring, news events is not a good way to consistently make money. We could trade the markets on expectations of the end of the world, but that event never happens, and if it ever did, who would care anyway? I am content to hold on to our newly placed deep in-the-money covered call write trade, along with our ratio call and ratio put spreads.
Followers of this letter should be:
Long one March Mini S&P (1190.00 strike) call option from 17.00 points and short 2 March Mini S&P (1220.00 strike) call options from 9.50 points each for a total credit of 2.00 points or $100 gross.
Long one March Mini S&P (1000.00 strike) put option from 23.00 points and short 2 March Mini S&P (935.00 strike) put options from 12.75 points each for a total credit of 2.50 points or $125 gross.
Long one March Mini S&P futures contract from 1125.50 and short one March Mini S&P (1080.00 strike) call option from 70.75 points. (This is a deep in-the-money covered write trade.)
March Mini S&P options expire in 79 days.
David Hall
The information and opinions contained herein comes from sources believed to be reliable, but are not guaranteed as to accuracy or completeness. The risk of loss in trading futures and/or options can be substantial. Each investor must consider whether this is a suitable investment. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results.
This newsletter is not intended for dissemination to the public without prior approval from David Hall.
