MTM Options Trader Newsletter - Volatility and Vertical Debit Spreads

[image]() [image] This Week in the Market Despite stocks retreating from their highs on Friday, the market was able to make some big bullish gains last week and broke some key resistance levels. Whether those new support levels will hold this week if tested is anyone’s guess, but the market remains in a bullish to non-bearish mode. There is a long way to go before any of the indexes get close to their all-time highs, but that could happen sooner rather than later. Implied volatility levels continue to wane, taking option prices down along with them. It is a slow start to the week as far as economic reports go, but as the week progresses the releases pick up the pace. The latest notes from the Fed’s last meeting are expected on Wednesday afternoon, and the most recent GDP number comes out Thursday. Quarterly earnings are still trailing off, but a few bigger names are set to report soon. Have a healthy, safe and profitable week! May 23: New Home Sales May 24: FOMC Minutes May 25: Jobless Claims May 25: GDP May 25: Pending Home Sales May 26: Durable Goods May 26: Personal Income and Spending May 26: Trade Balance May 26: Consumer Sentiment [Read Our Blog](=) Volatility and Vertical Debit Spreads Let’s start with something simple that most option traders know. Long options, such as long calls, have limited risk. The purchase price is the risk on the position. One of the many reasons traders love options so much is that they are usually far cheaper than buying 100 or fewer shares of stock. But sometimes even options can be quite expensive, so a trader may consider a spread, such as a bull call or bear put spread. Besides a potentially cheaper trade with less overall risk, there can be other benefits as well. Bull Call Spread For option traders, a bull call spread (debit call spread) may help control risk even better than [Continue Reading ...](=) MTM Watchlist Here are a few trade ideas we will most likely look at in group coaching class this week: SPY – More single and double calendars as well as vertical debit and credit spreads will be modeled out, and you should not be surprised. Until they stop working, we need to exploit what the market is giving us. AAPL – After breaking through some resistance around the $174 level this week, the stock faces another hurdle around $175. A move through that level will trigger some bull call spreads. GLD – By gapping below its 50-day moving average, it looks like a beautiful potential bear call spread above the moving average provided shares do not gap down on Monday. [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