Indices achieved new highs yet again this week. Earnings announcements drove stocks higher while pushing the VIX down to an all-time low.
The Russell 2000 was unable to breakout to a new high reversing lower Thursday during the intra-day market reversal. The RUT remains range-bound for the most part and a good underlying to sell iron condors on.
As mentioned, the VIX sank to another new low this week and closed the week slightly above 10. The VIX is eerily low and lulling investors to sleep. Many reports were also released this week documenting the extreme optimism present in the markets right now.
Considering earnings season headlines will slow down after Tuesday when Apple reports and the VIX is at ultra-low levels, it is hard to expect much more upside from here. As stated last week, there isn’t anything to take the markets down right now either, though. Therefore, look for a gradual drift sideways with an upward bias in the short term.
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The August positions remain very comfortable especially considering Thursday’s reversal. The puts are fabulous shape while the calls still remain a few percent out of the money.
We are evaluating new September positions to be opened soon but need volatility and options premiums to increase first. Our patience will be rewarded, it always is in trading
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We were evaluating selling out of the money calls as this SPY rose early in the week. However, with earnings season starting off strongly and option premiums at historic lows, just look at the ultra-VIX, we are being very cautious in entering new trades. Our patience will be rewarded, it always is in trading
A new trade is likely early next week.
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