S&P 500 and Nasdaq finished the week at record closes as the U.S. and China reportedly reached phase one deal in their ongoing trade war which includes some tariff easing and agriculture purchases. If you take a look at the S&P 500 and on the weekly perspective, the market seems can extend further than we think they can. So as a trader for now whether you look at charts or fundamentals, you got to be aware that stocks can trend higher and higher. When the markets break to new highs, it forces retail and institutional short players to make hard decisions, decisions as should they go ahead and bail out their shorts or to make rolls on their losing trades that are bearish or hedged. For bulls, it forces them to question if they are underperforming the index as the S&P 500 gained 25% this year and their portfolio is up just 10%., and they might feel can't wait until the next pullback and should get in the market now. ( S&P 500: 3168.80 +0.01% DOW: 28135.38 +0.01% NASDAQ: 8734.88 +0.20%) The new highs force decisions, and in some of the stocks, we can see the decision-making process accelerating like AMD which is a strong stock and getting even stronger. So what could be the tactics behind this type of strong stock that joining the market at all-time highs? The answer could be a bull verticals, call spreads on pullbacks. How to deploy it through the trades? For instance, let's pick the AMD's daily chart . By deploying those spreads or verticals based on the demonstrated trending logic, you need to find the most recent pullback as a support, in this case, it was on its 20 EMA line to its 39.2 level, if you think that won't hold you can also lower it to 30 EMA line which at 38.3 level. Then set these supports as your entry to target a prior record high as an exit (or simply just target a higher resistant line drawn above). For clarifying, in options trading, a bull call spread is a trading strategy designed to benefit from a stock's limited increase in price. The strategy uses two call options to create a range consisting of a lower strike price and an upper strike price. The bullish call spread helps to limit losses of owning stock, but it also caps the gains. In the end, traders, go and find the strongest stocks about to join this market ATH where these shorts being squeezed, follow the stronger trend to take gains and stop losses. Have a good weekend!
Really? Your best idea is to come on here and tell people to buy bull call spreads if the stock dips to strong resistance? What about buying the stock? Your short term people are really starting to irk me. You know that AMD will be 50+ by next X-mas. Why not just buy some stock at the 39.20 and 38.30 level you speak of and make 30+ percent over the next year? What is with the loading up on time sensitive options, and hoping for moon shots. Do you know anything about the mathematics behind options, volatility, theta, gamma, delta and so forth? Do you not know that you need to buy these over-priced options from somebody? I will be waiting, and so will the institutions. Time is not on your side. Buy the stock, do yourself and the world a favor. AMD will retrace during your timeline most likely, and you will lose. Options can't be traded outside of 9 to 4 hours anyways, and they will be waiting for your come expiration. Whilst the people who own the stock can sleep sound at night, not worrying about the options expiring worthless.
Hunt-orbe-Hunted
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@drchelsea1, Appreciated this! Thought no one actually cares what I have been doing here. I do have some insights on those greeks or measurements of options. Besides, the ideas itself is just a briefing of what I've observed from the daily market performance basis. I am not actually acting on any of these trades mentioned above, cause that's another story to be taught. Usually for options trading first step of mine could identify how the markets been priced recently as you said in your comment, is it a High IV or a low IV market? then the directional assumption of the underlying ( including the time and price as you mention of those greeks, direction delta, acceleration gamma, volatility vega, time theta), then to deploy an appropriate strategy whether is a put/call debit/credit spread or butterflies or some other like calender, back ratio.
Since I am new here, thanks so much for your kinda serious feedback post here. I will make some adjustments to my ideas further and would love to interact with some active traders like you. Please let me know if there is any chance we can talk more about the trades.