We saw the S&P start in the red to then quickly erase those losses and run higher as news broke that the U.S. and China are finalizing certain parts of their trade agreement.
Amazon.com Inc. is bouncing back as well after it opened lower when it released disappointing earnings and outlook last night.
The CBOE Market Volatility Index (VIX), known as the fear gauge, for the S&P 500, is at 12.70, which is below our key level of 15 — indicating more of a bullish bias.
The overall foundation of our market structure isn’t that strong because economic data are still weak and moving higher on rumors and gossip, which means a tweet or headline can quickly shift prices lower.
Understanding the market isn’t about creating a bias — it’s about being prepared and taking advantage of moneymaking opportunities.
Let’s talk about the newest position this week.
On Tuesday, we bought to open Kraft Heinz Co (NASDAQ: KHC) November 8, 2019, $29 calls up to $1.00 per contract.
We also sold to close our Facebook, Inc. (NASDAQ: FB) November 1, 2019, $195 calls up to $2.00 per contract.
Right now we’re holding:
Facebook, Inc. (NASDAQ: FB) November 1, 2019, $195 calls
Date: October 15, 2019
Reason: Hot Money was placing large short-term bullish prices would climb higher into the end of the month. Shares have been holding key bullish levels and had looked as if prices were going to go higher before pulling back.
Outcome: We exited for a loss.
Improvements: It was a bumpy ride and we were in the green on this position before headlines pulled the rug on shares. Instead of fighting the tape, we preserved our capital and exited with expiration on these contract the following week.
As always, keep sending your questions and feedback to [email protected]
My team and I will have a new trade for you on Tuesday.
To your wealth, freedom and options!