I think if there was a crash to be coming in the SPX the warning signs will come this month. They'd be in the form of price downtrending over the next few weeks, breaking under the previous supports and then entering into a shallow rally. If this price action happens, I think there's a lot of value shorting into that rally. I plan to finance deep OTM puts by selling ATM call credit spreads. Giving me the possibility of a jackpot if the move happens and still a fair chance to breakeven if the market is just moderately weak.
My profit target is 2830 and I will come into the market as a put seller if we hit 2700 and 2600. From here I expect a theta market for somewhere close to 6 months, during this time I'll buy stock and sell covered calls against them and as we get later into the range I'll start to look at buying call options.
Very interesting. It could very well happen. I'm curious, have you ever performed a similar forecasting exercise in the past? How did it play out? I'm objectively curious.
holeyprofit
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@kasinath, I was short March. Bearish through 2019 into 2020 and out at the low.
So a once-in-a-decade crash will happen...checks chart...1.5 to 2 years after we had a once-in-a-decade crash.
holeyprofit
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@NMPMODE, How much effort have you put into researching these crashes? I put in quite a bit and I found it's most common for the market to drop 20 - 30% in a dummy crash, go parabolic into a high and then the real crash comes. So, in short, yes. That's historically likely.
NMPMODE
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Well since you kindly asked, I'd say around 4,631 hours.
holeyprofit
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@NMPMODE, I have no idea how you've missed the signals then. But thanks for sharing your views.