- Thread starter
- #31
Curious, why do you expect the markets to stabilize over the next few weeks?
My idea of relative stability is not selling off another (and staying down) another 10% within the next 6 weeks.
My position was going to be on the RUT (Russell 2000 index). Since we were knocked down off the 50dma on 2/27, we are down almost 10%. I was looking for a short put strike around 580 which would represent a 19% drop from the 2/27 close. Options are priced based on where the market thinks the price can go based on volatility and time to expiration, not by where it was last week.
Basically the position has a profit zone of greater than 1 standard deviation to the downside. I think there is an edge since we have already sold off so much and “Probability & Statistics 101†tells us that any move greater that 1 std deviation has a high probability of bouncing back within range.
Anyway, I put in an order but it didn’t get filled because I was asking too much for it. I figured yesterdays selling would pump up the premium to the price I was asking, but it was a pretty controlled selling on just average volume. So, I’m watching the rally from the sidelines today (actually have JOB stuff to do) and I’ll look at the market again on Wednesday. Not sure if I’ll still be looking for an iron condor, depends on what volatility looks like.
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