A few posts ago I mentioned that I was going to be posting every new trade, but I really haven’t added anything of importance to this blog. One that I did do was my Weekly Butterfly on the SPX. Below is the risk profile of that trade.
A few things have changed for me technically speaking. I am still leaning to the downside, and I probably always will, but I think the downside if any is very limited to around 1400. But there are a few price points that I like and would like to see the SPX get to. The first number would be 1400, I think you have better odds doing an upside spread at that price point with higher premium in the puts. If we get to 1400 I will look at a broken wing butterfly or a strangle. The next number that I will be watching for is 1470, I will sell calls and get long vega at this point in a big way. For times when you have to put a bigger bet on, I think this spot is a high probability spot of stopping its upward momentum and either pulling back in a big way or getting some sideways action. I will plan for both.
The short term I think we will be choppy with no true direction unless the fed tomorrow does something that is questionable or unplanned. Now QE3 is being talked about lot, but if the market is anticipating it to happen, I would say with great confidence that it is already priced in. But if it doesn’t happen I think the market will give it up.