MTM Options Trader Newsletter - How to Measure Options Liquidity

[image]() [image] This Week in the Market The market maintained its volatile ways, vigorously moving higher on Wednesday after a Jerome Powell talk and gapping lower following the latest jobs report on Friday. The volatility index was all over the place but continued to slide lower overall. The S&P 500 moved through its 200-day moving average and then danced around it throughout the week, closing higher on Friday. A concerted move higher through that moving average could spark additional buying. On a bearish note, the S&P 500 is also setting up a possible bearish head and shoulders pattern. Looks like a tug of war may be in the works soon enough. This week is not as crazy as far as economic reports go, although unexpected news can always happen. Consumer credit and the latest updated PPI number are a couple of the more watched numbers expected this week. The next FOMC meeting is still over a week away with a 50-basis-point hike as the front runner at the time of this writing. Quarterly earnings remain slow for the time being. As always, there’s nothing wrong with sitting on your hands in this volatile environment. Enjoy the holidays! Dec 5: Factory Orders Dec 6: Trade Deficit Dec 7: Productivity and Labor Dec 7: Consumer Credit Dec 8: Jobless Claims Dec 9: Producer Price Index Dec 9: Wholesale Inventories [Read Our Blog](=) How to Measure Options Liquidity Before we even think about thinking about how to measure options liquidity, we need to talk about what option liquidity is. Liquidity is a term traders love to throw around, but SO MANY traders don’t fully grasp the concept. They look up online how to measure it and often get some bad guidance that doesn’t help at all. Here’s the skinny on what options liquidity actually is. What Is Options Liquidity? Simply put, liquidity is how much buying or selling pressure an option can absorb without changing the price. (And if you’re a person who likes to reference definitions, keep a link to this handy. The stuff that comes up [Continue Reading ...](=) MTM Watchlist Here are a few trade ideas we will look at in group coaching class this week: SPY – This ETF has been a powerhouse of opportunities for both bullish and bearish outlooks. Expect that trend to continue this week with more vertical credits and double calendars. NFLX – This stock has been on fire and rallied vigorously to close out the week. Additional bull call spreads will be considered this week. AAPL – The stock has underperformed with news pushing it lower recently. There are several potential resistance levels that make bear call spreads desirable if the weak trend higher continues. [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 emailing investorservices@theocc.com; 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