Kudos to MMs
- Thread starter nitro
- Start date
Where to get in on the pullback? Ideally no higher than 1342, but it may easily go to say 1350 and take off again. On the other hand it may go back to somewhere around 1320 ish before heading higher.
Who knows? Pick a spot where you are comfortable. If you use ITM 75 delta call options to get long, at say when SPX goes to 1350 (if), a drop to 1320 won't hurt that much. On the other hand, after going to 1350, the market may rally back to 1372, only to form double topish looking patterns that may stall it. Now you are sitting on a wasting asset. So perhaps sell a (ratio'ed ?)14xx (1425 ?) call against the ITM 75 delta call to alleviate theta, and buy back the short call(s) on a breakout of 1372.
That is the art of trading! Choose an instrument, choose an entry, and forgive yourself because no one knows. I am pretty certain SPX goes much higher from here, but HOW it goes higher is just as important as when when using options.
Note that the R/R here is beginning to get thin. In the above scenario, we are probably risking 30 handles * slowing delta, (probably 20) to make hopfully 75 from 1350 to say 1425. This is decent for sure, but not like it was before when you were risking 20 to make 100.
Who knows? Pick a spot where you are comfortable. If you use ITM 75 delta call options to get long, at say when SPX goes to 1350 (if), a drop to 1320 won't hurt that much. On the other hand, after going to 1350, the market may rally back to 1372, only to form double topish looking patterns that may stall it. Now you are sitting on a wasting asset. So perhaps sell a (ratio'ed ?)14xx (1425 ?) call against the ITM 75 delta call to alleviate theta, and buy back the short call(s) on a breakout of 1372.
That is the art of trading! Choose an instrument, choose an entry, and forgive yourself because no one knows. I am pretty certain SPX goes much higher from here, but HOW it goes higher is just as important as when when using options.
Note that the R/R here is beginning to get thin. In the above scenario, we are probably risking 30 handles * slowing delta, (probably 20) to make hopfully 75 from 1350 to say 1425. This is decent for sure, but not like it was before when you were risking 20 to make 100.
SPX ~1343. Must enter back long here imo. See above post as to an opinion on one of the multitude of ways on how to do it.
You can sell the 1425 SPX call(s) options now (at the same time you go long a DIM call) in addition to being long a DIM call, if you think this is more likely to go sideways to lower, than it is to go back higher. Imo, I would not sell the 1425 call(s) until SPX was well on its way back to 1372, say at SPX 1365 to 1370, because I believe the market (SPX) is (quite) undervalued, within a strong trend higher in place. So sharp turns are likely. So when you go long here, I would not make it a spread initially. I would simply be 75 delta long, but you might choose to put on a spread at once. In this case, remember to do the long side first.
We will remember to buy back the sold calls on a clean breakout of 1372 and let the long DIM call run, if we get there.
You can sell the 1425 SPX call(s) options now (at the same time you go long a DIM call) in addition to being long a DIM call, if you think this is more likely to go sideways to lower, than it is to go back higher. Imo, I would not sell the 1425 call(s) until SPX was well on its way back to 1372, say at SPX 1365 to 1370, because I believe the market (SPX) is (quite) undervalued, within a strong trend higher in place. So sharp turns are likely. So when you go long here, I would not make it a spread initially. I would simply be 75 delta long, but you might choose to put on a spread at once. In this case, remember to do the long side first.
We will remember to buy back the sold calls on a clean breakout of 1372 and let the long DIM call run, if we get there.
