The market is following the bearish script, making new lows from index to index but still making it demanding to manage positions and stay with the bigger trend. Counter-trend rallies are ferocious. They have threatened and at times hit even the loosest of stops. Who ever thought taking and/or keeping gains would be such a formidable task?
There was a time in this service where we recommended trading the system with no stops on our options, and we were getting our heads handed to us, sometimes back to back to back. Once we discarded that practice and added stops, performance perked up as our newly implemented stop regimen was successful in exiting trades before total calamity even though some of those trades turned around and zoomed higher by 100-200-300%, thus leaving our exited trades at the alter. Trading options is difficult, one size never fits all and Mr. Market has his ways of stripping the cupboard bare through bouts of short-term volatility hammering the fragility of short-term option positions. But all of that seems to have changed.
Starting right around November 1st this system took off, contemporaneous with a relentless bear market. One where mistakes are fixed by sheer belief in the trend and those once scary counter-trend rallies start running their course and flip back down before even the most conservative option trader (oxymoron anyone?) can log onto their account and sell their puts. WE ARE THERE. And maybe the hardest task going forward will be to do nothing, buy the puts and walk away. Finally: A time for us (inspirational video below).
Pending Sell Signal: FB on a close below $142 (currently $144.05). If triggered we will be buying the Jan $140 Puts. With already so many puts already in the portfolio, I'd rather be sure that price breaks below that bottom counter-trend blue channel on the chart below.
FB Daily Chart - Picking Your Spots
UPDATED TRADING TABLES
Somewhere (A Time For Us)
- Words and Music by Leonard Bernstein