Conversely when it does break (and it probably will), it will significantly crack the structure.
There shall be rebounds after that but the market will be unlocked then.
My view is:
- The bold black line shall retain.
- As the consequence, the red dashed line shall be broken in the next few weeks.
- Theoretically, SPX could also stay many weeks beteween 2120 and 2040 but I had the impression 7 weeks was enough already. Let's see.
There s no free lunch.
Here, I am expecting the market to fall through 2040.. potentially next week.
My opinion: you sell options when you dont mind getting exercised. HERE, i would sell calls 2140 expiry June because i dont mind if the spot goes there.
+ 1 SPX Mar1 2015 2085 put (March 6 expiration)
-1 SPX Mar1 2015 2080 put
@ 0.35 credit
two days later the market crashed. Then I was rolling that trade until today, when finally I was able to get rid of it with some small gain, but it was quite stressful. Looking for ways to avoid this.
1) you get long the put spread, how can you earn premium? You should pay something.
2) Can you confirm: the put spread max risk is 5, the premium 0.35. You could multiply premium by 13, correct? the maturity of your trade was just 3 days?
You probably inverted the signs. If i got that correctly:
Your strategy: spot ref 2110, you short 3d put spread 2085/2080 and you receive 0.35pt.
(1) 3d, 1pct away risk in a market that moves 1% per day... you will get hit often enough to lose in 1 time what you made over 10 trades...
(2) i guess for the 0.30 to be significant you have to leverage your trade massively and you lose on the first few trades, the strategy never take off.
I think: you need to totally change angle....
Options: you sell expensive options that you think may not happen or where you are happy to be exercised.... You buy cheap options. YOU DONT SELL CHEAP OPTIONS.