Another day, another dollar. Or should I say another week, another stock market rally. The S&P 500 finished the week +2.39% mainly due to large gains on Wednesday after FOMC minutes and positive news from bank stress tests. Overall the economy seems to be humming along ok and investors and feeling confident.

Market indices are back to overbought levels already although we?ve seen over the last 2-3 months that doesn?t mean much. You can see below that the Option Buyers Sentiment Gauge is well below bullish extremes as is the McClellan Oscillator. If anything, they are both looking decidedly neutral. With my trading style, I find it hard to chase markets that are this overbought, but for any bulls out there I think selling some OTM April Bull Put spreads on SPX would make sense here. There is strong support at 1300 and 1275 so something like the 1260-1270 spread might make sense, but with volatility so low, decent premiums are going to be hard to come by getting filled may be difficult.

AAPL provided plenty of highlights again this week. Traders came in and took profit at bang on $600 (well $600.01 to be exact) on Thursday. Implied volatility is up to 38% so it could be a good time to look at an Iron Condor.

Volatility is at a 52 week low below 15, it may stay there for a while, but one thing I can guarantee is that it will rear its head again at some point in 2012. We will be waiting.




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