MTM Options Trader Newsletter - Comparing Bearish Vertical Credit Spreads

[image]() [image] This Week in the Market The market was due for a pullback, and it happened this past week with stocks moving lower, especially on Friday. The Dow briefly traded above its 200-day moving average, but the S&P 500 was unable to close above its 200-day moving average, especially with the market falling on Friday. Traders and investors are left to wonder if this is a temporary pullback or if the selloff will continue into this week. As always, time will tell. Implied volatility levels and option prices spiked a tad higher with the market falling. Some economic reports worth noting are listed below, including a couple of housing reports and the latest GDP update. The next FOMC announcement is still several weeks away. Quarterly earnings continue to trickle in with a few companies still waiting to report. Have a healthy, safe and fantastic week, and remember to think of yourself as a risk manager first! Aug 23: Manufacturing and Services PMI Aug 23: New Home Sales Aug 24: Durable Goods Aug 24: Pending Home Sales Aug 25: Jobless Claims Aug 25: GDP Aug 26: Consumer Spending Aug 26: Trade in Goods [Read Our Blog]() Comparing Bearish Vertical Credit Spreads Vertical spreads offer an option trader a wide variety of risk/reward scenarios. As I like to say, there are options on your options. Maybe more importantly, there are trade-offs when it comes to options and the different strategies that can be used and vertical spreads are no different. Many new option traders tend to stay away from credit spreads. When I teach new option traders, I tell them to consider keeping their contract sizes very small if they are going to trade vertical credits. If a vertical credit is set up out-of-the-money (OTM), it offers a higher probability [Continue Reading ...](=) MTM Watchlist Here are some trade ideas we may look at in group coaching class this coming week: TXN – The stock has dropped down to its 200-day moving average and may be ready to bounce back and move higher again. Potential bull call spreads will be explored. AMZN – Bear call spreads have worked out well with the stock staying below its 200-day moving average. Additional bear calls may be examined at just over the moving average. COST – With a nice potential support level at $550 and a pullback on Friday, bull put spreads at or below that level will be considered. [image](=) 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