Option trades – week of Aug. 8, 2016

Last week

Week endingOpenHighLowCloseVolume
(million)
July 29, 20162167.752172.502152.002171.007.3
Aug. 5, 20162174.002178.502140.502177.509.2

Commentary for last week

SP500 index made new highs again and managed to close near the new high area on Friday. The price action was bullish and confirmed that 2141.50 was a low of the ultra-short-term correction.

Last week’s trades

160805-ES-60

The futures price never reached either of Nat’s trigger prices last week, and strictly interpreting her numbers would have kept you out of the options all week.

However selling Puts either when the price broke below Nat’s meanline, or when it came within 6 ticks of her Puts trick would have been profitable, bit it required a looser interpretation of her calls.

We’ve changed the language of her calls slightly to indicate that her trigger levels are approximate, not iron-clad (see this week’s trades)..

This week:

Member content

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Hi . Here is the member content for this week.

The breakout of the narrow consolidation range that has contained prices for the previous 13 days, and thr market’s ability to hold price there is bullish. The Index could resume its uptrend and head toward the next high destination at 2200-20 zone.

2175 is the option meanline for this week. Holding above it will lead the index to make a high for the month.

Calls:

Above 2175 strike price, There are large calls contracts bought at 2200-10 and 2220-30 level. Index could go up to there if 2175-65 zone is holding up. Our system shows that index and ES shouldn’t close above 2235 level, therefore we look for short the calls when price goes around 2195 area.

Puts:

Under 2175 strike price, the 2150-40 and 2125-20 strike price puts are bought and used for hedge purpose. It indicates that as long as price stays above 2120 level, it should not trigger heavy selling. But index could go lower to 2100-95 zone if 2120 level is breached and fails to hold up index. Our system shows that index and ES shouldn’t close below 2135 level, therefore we look for short the puts when price goes around 2150.

Put/call volume ratio on SPX and ES Aug. 12 option is 1:1 from 2225 to 2150 level, and 2:1 from 2150 to 2095 level.

Nat’s option trades for this week

ExpirationStrike price Sell options when ES price is
Aug. 12, 20162220, 2225 callsaround 2195
2210calls
Meanline 2175
Aug. 12, 20162120 putsaround 2150
2110 , 2100 puts