MTM Options Trader Newsletter - Implied Volatility Can Be a Bull Put’s Friend

[image]() [image] This Week in the Market The market moved lower this past week, with Nasdaq being the most bullish, as it did its best to close in positive territory but ultimately failing. A gap higher on Friday was met with selling to close out the week. The three major indexes are all trading well below their 50-day moving averages with the Dow closing below its 200-day moving average on Friday. A non-bullish bias continues to make sense as potential resistance levels continue to hold when tested over the last couple of weeks. Implied volatility and option prices continue to be elevated with IV skews between expirations being spotted more frequently than a month ago. Long time spreads love that! At the time of this writing, nothing had been solved to end a government shutdown scheduled to happen on Sunday if no agreement had been reached by then. It could be an interesting open on Monday so buckle up. As far as other economic reports go, there are several including the latest September jobs report due Friday before the open. Have a healthy, safe and splendid weekend and don’t forget to work on your trading plan too! Oct 2: Construction Spending Oct 3: JOLTS Oct 4: Factory Orders Oct 5: Jobless Claims Oct 5: Trade Deficit Oct 6: Unemployment Oct 6: Consumer Credit [Read Our Blog](=) Implied Volatility Can Be a Bull Put’s Friend Implied volatility has been predominantly low up until this recent sell-off in the market toward the end of September. With this sudden drop, IV levels and option prices have surged higher to levels not seen since late May This increase gives an edge to option sellers, and the potential decrease, can help them as well. Let’s take a look. Implied Volatility Implied volatility (IV) is the estimated future volatility of a stock's price. More often than not, IV levels increase during a bearish market and decrease during a bullish market. IV increases push option prices higher and vice versa. The reason is that a bearish market is perceived as riskier than a bullish market. [Continue Reading …](=) MTM Watchlist Here are a few trade ideas that we will most likely be looking at this coming week: SPY – With the market continuing to look weak, bear call spreads have been profitable around resistance levels. More bear calls will be modeled out unless a rally is in the cards then bull puts around potential resistance levels will then make sense. META – Iron condors have been fantastic for this stock as it continues to hang around its 50-day moving average. Additional iron condors will be looked at as well as additional calendar spreads too. NFLX – The stock has continued to drop and looks like its 200-day moving average might be the next stop. Potential put calendars and bear call spreads will be modeled out. [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