The Arena
Lets assume for a minute that the floor in equities has been reached. Furthermore, lets assume the short term ceiling has also been reached. The S&P 500 failed to stay above $458 in early February as it tested that zone twice in as many weeks. Of course, since then we haven’t seen much bullish price action, until last week that is. Will this market retest the $458 zone, blow right past it, or watch as it becomes a February long forgotten. Lets wait and see.
The Coach
I myself have started easing back onto the investment scene with several orders already on the books. For those interested, I’ve made every thing I’m buying available on the InvestmentLocker page. However, I do think the overwhelming joy millions are feeling after watching their portfolios rise with any significance this past week will soon be met with a quantifiable dose of reality. Simply, the trading range we’re in may be the range we’re in and geopolitical risk could stimy even the best attempts to move higher.
Alternatively, price was indeed able to close above that pesky red candle high in early March so there could be good reason for the bear to continue his slumber. Unfortunately however, price is also at a level where the bears have showed some strength in recent weeks.
Will we stay in the range? Here is an article from Bloomberg to discuss the fate of the S&P 500 Index this year.
The Attack
If you agree the chart above suggests a rangebound market ahead then a SPY iron condor could boost the balance sheet. In contrast, this may just be a little taller cliff for SPY to jump off of. Those crazy market participants and their extreme sports addiction! Seriously though, if that does happen then a bear call spread could prove beneficial to the bottom line. Lets go get it this week!
Neutral assumption
| Buy To Open | Sell To Open | Entry Order | Total Risk | Prob. of Profit |
| 14 APR 22 467 Call | 14 APR 22 465 Call | $60.00 | $140.00 | 60.48% |
| 14 APR 22 413 Put | 14 APR 22 415 Put | – | – | – |
Bearish assumption
| Buy To Open | Sell To Open | Entry Order | Total Risk | Prob. of Profit |
| 14 APR 22 462 Call | 14 APR 22 460 Call | $60.00 | $140 | 70.59% |
God Bless,
Jeff
