MTM Options Trader Newsletter - Option Vega Works Both Ways

[image]() [image] This Week in the Market It’s likely most traders and investors didn’t see last week transpiring as it did. After a shaky start, stocks raced higher the rest of the week with several major indexes closing above prior resistance levels. The S&P 500 closed above a downward sloping trend line started at the beginning of the year and the 4,300 level too. In fact, the index closed just below its 200-day moving average, which it has not traded above in about a month. That will be the line in the sand for this week. A lot can happen over a weekend, especially when it comes to the Russian invasion of Ukraine. The indexes may be a tad extended, but a strong bullish close on Friday showed buyers were not spooked. Implied volatility and option prices retreated with the rally. The Federal Reserve laid out a plan with several expected rate hikes this year, which seemed to ignite buying. Fed Chair Powell is expected to talk on Monday as are other members throughout the week. In addition, there are several economic reports due out this week, including a couple of housing numbers. As far as earnings go, reports remain slow with the next round still several weeks away. Have a happy, healthy and productive week, and may all your disciplined trades be profitable! Mar 21: Chicago Fed Index Mar 23: New Home Sales Mar 24: Jobless Claims Mar 24: Durable Goods Mar 24: Current Account Deficit Mar 25: Pending Home Sales [Read Our Blog]( Option Vega Works Both Ways If you have traded over the past several weeks, you have undoubtedly noticed how volatile the market has been. As an option trader, you are or probably should be familiar with how implied volatility changes can affect option prices. Below we will take a look at a topic I covered in class a couple of weeks ago when the market was seemingly all over the place. Vega Defined Option vega is the measurement of the option’s price sensitivity to changes in the volatility of the underlying. To keep it simple, like I generally like to do, vega changes the [Continue Reading ...]( MTM Watchlist Here are several trade ideas we may look at in group coaching class this coming week: SPY – With the ETF closing right around its 200-day moving average, it could go either way. Potential bear call or bull puts will be considered depending on early action. TSLA – The situation is similar to the SPY’s, but for TSLA it’s the 50-day moving average instead. A concerted move above the moving average and the $900 level could trigger some additional bull call spreads. GLD – After a huge run higher, gold may be sliding lower again. Potential bear call and bear puts spread will be explored especially if it stays below the $180 level. [image] We're honored to have Dan's Book Trading Option Greeks listed as one of the [Top 6 Books to Become an Option Trader]( by Investopedia. [Buy Now on Amazon](=) The strategies in this newsletter are for educational and informative purposes only. All information disclosed in this newsletter should not be considered complete in its entirety. Market Taker Mentoring, Inc. will not be held responsible for changes, oversights, errors or omissions. Dates, prices, news and other information may not be accurate. Please verify all information before trading. You alone are responsible for your own investment decisions. Options involve risk and are not suitable for all investors. Before trading options, please read Characteristics and Risks of Standardized Option (ODD), which can be obtained from your broker; by calling (888) OPTIONS; or from The Options Clearing Corp., 125 S. Franklin St., Suite 1200, Chicago, IL 60606. No statement in this newsletter is intended to be a recommendation or solicitation to buy or sell any security or to provide investment or trading advice. Traders and investors considering options should consult a professional tax advisor as to how taxes may affect the outcome of contemplated options transactions. Copyright Market Taker Mentoring, Inc. 2008 - 2022. All rights reserved. Reproducing or redistributing this content is a violation of federal law. [image] If you do not wish to be contacted via email, you can unsubscribe using this link: [Unsubscribe]( Unsubscribing from email notifications DOES NOT cancel your class, subscription or recurring payments. We recommend that current students do not unsubscribe from email notifications. If you unsubscribe from email notifications, you will not be notified on how to access the classes or subscriptions in which you are enrolled. Market Taker Mentoring, Inc. PO Box 117 Frankfort, Illinois 60423 United States