Options – week of Nov. 9, 2015

Commentary for last week

Week endingOpenHighLowClose
Nov. 62073.002110.252064.252093.50
Oct. 302066.002094.752051.252073.75

The S&P 500 index and ES all had a minor three-day pullback from the high made on Tuesday. It didn’t change short-term uptrend direction.The futures closed up 20 points for the week, at the prior week’s high.

Option trades

Last week Nat’s trigger for selling Calls was 2085, and recommended strikes were 2105 and 2095. The ES traded above the trigger price on Monday and stayed there all week. The premiums paid for Calls were boosted by “irrational exuberance” as the market rallied, and it took some fortitude to sell the 2095 Calls into a rising market.

However at the close Friday both our strike prices expired OTM, and we retained all of the premium for both lots.

Here’s the annotated intraday chart

ESZZ5 intraday prices, 60-minute bars

ESZZ5 intraday prices, 60-minute bars

 

 

This week:

The back-and-forth comments from the Fed, combined with the favorable Non-Farm Payrolls report Friday morning have sent traders scrambling. Normally the prospect of a Fed rate increase would depress prices for stocks. But sometimes bad news (for stocks) is treated as good news; traders don’t know if this is one of those times.

Bonds and precious metals have been declining sharply, even as equities hold up.The equity rally may well continue for a while.

Member content

This content contains the detailed buy/sell levels for this week. It is available only to paid members, but you can get instant access for $9 per month by clicking the Membership tab in the top menu. You can see previous calls in the prior week’s post.