12:55pm (EST)
Futures were looking promising ahead of the open but when they started to fade our expectations came down a notch as we knew the market was setting up for another dull day.
The slick talking pros are once again saying today is the start of a correction, the market looks tired, take profits here, the market is due for a pullback…but not one has talked about the trading range and how key support levels are holding.
Trading ranges are tough to trade but we have been well prepared for this one.
As option traders, trading ranges are especially troublesome because of the time decay associated with options. Since options are time sensitive, it makes being right about the option or market that much more important because price action has to happen by a certain date.
You can still be right on a stock or the market as to if they will trade higher or lower but if your positions remain in a trading range the clock winds down and you run out of time. This helps covered call trades like the ones in our Weekly Wrap but not directional trading.
The good news is that the longer a trading range continues, the bigger the breakout or breakdown will be.
The even better news is that our portfolio will be light and we will have plenty or room to attack the next trend.
We have closed our last 11 option trades for wins despite the sloppy range the market has been in as we played the breakout to new highs at the end of July and closed profitable trades into strength. We still have a few open trades coming down to the wire this week and while we could take a hit or two, we have been on a tremendous run since late April.
We also have 2 New Trades today because we do feel there could be a push to resistance by week’s end. One is an options earnings trade that we expect to be in and out of.
As we head to press, the Dow is up 48 points to 15,467 while the S&P 500 is higher by 4 points to 1,694. The Nasdaq is gaining 8 points to 3,678.
Subscribers, check the Members Area for the updates. We may also have a New Trade for the Weekly Wrap so stay on your toes into the close.