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On Sep 14, 1:50am, James Charles wrote:
>
> Friday's close gave me a signal to buy oex calls.
September or October? At, in, or out, of the money?
> Although I cannot
> reveal the full methodology of my signal, it is confirmed by common
> indicators such as a stochastics turn up from oversold, an engulfing
> candle, a nice position relative to the support line at 873, and the
> fundamentals as above. If the market rests or retraces on Monday, calls
> can be bought into weakness for a rally later in the week.
>
> Would anyone else like to share their thoughts for early next week?
If the OEX follows its usual expiration pattern, it'll run up Mon/Tues,
and then stay releatively flat going into expiration. Of course, one
too many cocktail parties attended by the Fed. chairman, or an Intel
earnings pre-announcment could change all that.
With $VIX at 27, I'm looking for strategies that let me sell volatility
rather than buy it. If I did the math correctly, OEX options currently
have priced in a +/- 35 point 1 std. dev. move (OEX closed approx. 895
on Friday) over the course of next week. That's about 1.5 times the
volatility we've seen over the course of the past 3 rather volatile
weeks (the weekly range has been about 40 points).
Based on the chart, there's been overhead resistance at about 910-915
and support at 875-880; OEX is roughly mid-way in that range. I'm
looking at selling an 920/910 Sept. call credit spread, and selling
the 870/880 Sept. put credit spread, netting about 4 points for both
spreads. If both sides go to expiration out of the money, that's
about a 4 points of return on 6 points of risk, on a one week hold.
If OEX makes a big run in one direction however, there's risk of
early exercise on the short strikes - this spread has to be monitored
closely.
Any better ways to take advantage of the current high options premiums?
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| Gary Funck, Intrepid Technology, gary@xxxxxxxxxxxx, (650) 964-8135
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