With the markets in the US and now all over the world dropping we must close all our Bull Put spreads. Subscribers who had their trades closed automatically with a stop loss order are OK this weekend. Others have 2 options.
1) If you have the funds buy back the short option you sold on Monday and keep the long option open. The long options will grow in value as the market drops and can be sold for a profit that will more than cover the cost of buying back the short option.
2) Exit the entire bull put trade for a net loss. Unfortunately their are no save trades to roll to and the premiums on Bear Call trades are very low.
The only relief that will might stop the markets from dropping is an interest rate cut next week. Below is a text being included in many market updates this weekend:
Roberts and other market watchers say it's possible that the Fed, and perhaps other central banks, could cut interest rates this week — ahead of the central bank's scheduled meeting at month's end — if the credit markets don't show signs of life. With oil prices well off their midsummer highs and indicators pointing to a slower economy, the Fed's worries about inflation are less than they had been, making it easier to justify a rate cut.
We were in a Bear Market but now it is worse with bank failures and a major credit crisis. The Dow is expected to keep dropping for the remaining of the year reaching 9,000 or lower. The only safe option trades that can be completed are Bear Call Credit Spreads and the purchase of DIA and SPY put options. Iron Condor trades cannot be completed in a market like we are experiencing now. I will be refunding all subscription fees since we are realizing a net loss for a second month in a row.
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