Volatility Still Reigns
Volatility Still Reigns Hello Smart Option Sellers! If you follow the markets every day like I do, you know how volatile it's been. After the rout that took place all through October, we had a heck of a bounce that ended last Wednesday which regained about 50% of the losses. At that time, it seemed like we had the all clear that the bulls were back as the indexes managed to climb back above their respective 200-day moving averages - the typical line in the sand that can make or break a stock's direction. Well, we've since dropped again, rather strongly over the last week. So apparently, we're not out of the woods yet. I'm glad I didn't fall for the head fake of the rebound and jump into new put-sells for us even though the bounce did look very convincing that it would hold. A lot of damage was done in October and it's going to take some time for investor's confidence to build back up before jumping into long positions again. We'll continue to see back and forth action, and possibly even make new near-term lows. There's a lot of different catalysts out there to support both side of the bullish/bearish arguments. On the bullish side, we've had a great earnings season, and we're coming into the most bullish six months of the year - November to May. Also, there's been a ton of companies buying back their own shares, which is typically seen as a bullish indicator. On the bearish side, we have rising interest rates - an event that will typically pause any bullish momentum for stocks. Also, the political maneuverings out of D.C.has made the markets nervous, specifically Trump's tariff war with China. Which side wins out? If you're a long-term investor, you know the stock market will eventually go back up. It always does. But where and when will that happen? Nobody knows. But if stocks continue to show good earnings and decent future guidance, you have to believe share prices will follow to the upside. In the meantime, where does that leave us for our current put-sell positions, and for new positions going forward? Considering that put-selling is a neutral-to-bullish strategy, it makes little sense to jump into new plays when more near-term downside is possible. Cash preservation is paramount! It's better to wait for some semblance that the market is on better footing before putting your dollars to work. Sure, we may miss the bottom, but I'd rather be a little late than too early. Don't give in to the urge to make a trade just because you may be bored or need to feel like you have to be involved. That's just silly. Don't do it! The time will come. Trust me. I'm always here watching the market, so when it's time to jump back in, I will let you know. As far as our current positions - some are in the green and some are in the red, but all of the stocks still remain above the strike prices. That gives us cushion for more downside action if it occurs. For now, continue to hold all open positions. That's all for now. Contact me here with any comments, questions or concerns. Regards,
Lee Let's Grab That Cash!