Market Curiosity: Exploring Markets And Systems

February 15, 2009

Short the S&P 500

Filed under: Futures Trades — Tags: , , , — Jeff Fitzmyers @ 6:03 pm

– The uptrend line was broken. I like how Trader Vic draws them.
– Both moving averages are pointing down.
– MRCI has a correlation chart that is rather bearish. http://www.mrci.com/
+ The CCI’s are all looking like a buy, but if they fail, it is big failure.
– The fundamentals are not so great. Last time a “stimulus” bill passed the market went down.
+ The last down bar was on low volume.
– Recent volume has been a little low.

Strategy:
– Attempt to short intra day. But if Thursday’s low of 805.5 is significantly breached, I will just buy some March 850 puts. I am not an expert on options, but… Since volatility is rater high I assume option premiums are rather high. In general, the more in the money an option is, the less premium it has because there is reduced uncertainty if the option will expire in the money or not. In the money option costs more, but is less expensive.
– Since I am now assuming a crash, I am interested in using a small amount of money to buy April 650 puts. (Crashes are rather rare. Nevertheless, the initial target would be around 450. Next 300. And of course, as the Avid Traders joke, zero is strong support šŸ™‚

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