Support & Resistance

Links:

http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:support_and_resistance

https://www.investopedia.com/articles/technical/061801.asp

https://en.wikipedia.org/wiki/Support_and_resistance

Current examples:

Meetup -Debit Spreads make sense too!

Here is an example of a 1 week bullish Debit Spread trade on IWM...

It was actually closed at around $2.25 for a nice profit, but as you can see it kept going all the way to almost full value by the end of the week.

At the Meetup we'll discuss the guideline parameters for entering & exiting the trade -which strikes, which Expiration, Implied Volatility, etc.

Opening price on Monday afternoon $1.90

On Friday it closed at around $288

Huge SPX January move!

3rd Quarter ends with new all time highs, VIX lows

S&P 500 -Large Caps

IWM -Small Caps

QQQ -Nasdaq 100

VIX

Note the rise in Volatility in some FAANG stocks this week

Note the rise in Volatility in some FAANG stocks this week
CBOE Blogs

FB Options, post earnings

FB just reported earnings yesterday, and the stock dropped around 5%

Here is an example of how you can use Options to structure a new trade on FB

Implied Volatility is still high today, so premiums are good.

This is NOT a trade recommendation, and is only for illustration and educational purposes.

Selling January 115 Puts for 3.25 (naked)
Selling twice as many Call spreads for $1.50

Total collected is the combined dollar/quantity amount.

This trade should only be done if you don't mind owning Facebook at 115, less the total credit collected. This is the downside risk.

The upside risk would be the Call spread risk,  minus the 3.25 collected from the Puts.

You could also look at the numbers for December (43 DTE) -you'll get paid faster!

And you could also analyze different ratios, and different strikes.

This is simply to illustrate how to take advantage of high implied volatility, in a somewhat neutral trade,

Another example would be to do an Iron Condor, which is the same trade, but with a Long Put to limit the downside risk and the margin requirement. Of course in this case, you would also not have the risk of being assigned the stock at a discounted price.

All time highs for Stocks

Current markets at all time highs, except for the Small Caps (Russell 2000)...
(click images to enlarge)

Small-caps -almost at the all time high!

Bonds seem to have followed stocks too! Normally its the inverse...