MTM Options Trader Newsletter - Use a Spread to Offset Positive Vega

[image]( [image] This Week in the Market It was another week with a lot of wiggling and jiggling but not much movement overall, although the market did close weakly on Friday. While the market is not selling off, it’s also struggling to move higher. That said, the Nasdaq traded at its most recent highs this past week. The 50-day and 200-day moving averages remain well below where the three major indexes are trading. A non-bearish outlook on the market still makes sense, and implied volatility levels continue to wane lower as time passes. There are several economic reports to keep an eye out for this week, including a couple of housing reports. Housing stocks keep trying to move higher with some at yearly highs. In addition, the latest retail sales number is set to be released on Tuesday before the open. Quarterly earnings remain slow, but several retailers are set to release their numbers, which should be interesting. Have a healthy, safe and spirited week, and remember you are a risk manager first! May 16: Retail Sales May 16: Production and Utilization May 17: Housing Starts May 18: Jobless Claims May 18: Existing Home Sales May 18: Leading Economic Indicators [Read Our Blog]( Use a Spread to Offset Positive Vega The market has been a volatile machine as of late. Option prices and implied volatility levels have moved higher in response. That said, implied volatility and option prices are destined to come back down again if and when the market rallies. Generally, IV levels move higher when the market drops, and IV levels drop when the market rallies. If you have an option position with positive vega (long options), this might be a bit concerning for you. If it is, and it probably should be to some degree, one way you can offset that risk for a directional trade is by using a spread. [Continue Reading ...](=) MTM Watchlist Here are a few trade ideas we will most likely consider in group coaching class this week: SPY – Double and single calendars were back in business this past week, and there is no reason not to look for more, along with some vertical credit spreads. VLO – The stock has been beaten up with the energy sector but is showing signs of recovery. A solid move through $111 could trigger bull call spreads. BA – This stock has been a money generator using short iron condors. Additional iron condors will be explored this week as well. [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 - 2023. 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