Market Overview:
The S&P finally had its long awaited pullback today. We shall see if we get some follow through to the downside tomorrow. There's a lot of support at SPY = 128 as that coincides with the 10-day SMA. Below that there will be more strong support at SPY = 127, which coincides with the 20-day SMA. It's options expiration week so that will probably add to the volatility.
SPY Options Trading:
I got out of my large long Feb 127 put position today for a modest gain. I'm still holding 22 Jan 2011 126 calls and 22 Jan 2011 129 calls short. My plan right now is to hold these calls short until expiration. If we can get a pullback to 127 then I'll look to close out the 126 call position and at the same time sell some weekly 126 puts. If we make another run to 129, I may look to start building another Feb put position.
Key Levels in the SPY:
Resistance: 128.50, 128.75 (5-day SMA), 129.20, 129.50
Support: 128 (10-day SMA), 127.50, 127 (20-day SMA)
Individual Stock Trading:
The Ag space had a big sell-off today on news that Cargill is selling its 64% stake in Mosaic (MOS). If there is continued selling tomorrow I'll look to try and capitalize on the volatility by selling weekly OTM puts in one more of the following Ag stocks: POT, MOS, AGU
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