Well, here we are folks… Election Day.
Depending on who you talk to, today could be “the most important mid-term election of our lifetime.” (aren’t they all?)
All the hype. All the buildup. All the angst.
Regardless of the outcome, it’s possible U.S. stocks can experience outsized and emotional moves. We all remember November 2016 when final voting tallies were coming in and overnight futures were signaling the end of times, all trading limit down. Every market participant was scared and likely had a sleepless night. And what happened when they rang the opening bell? Stocks screamed higher and haven’t ever looked back.
JC penned a post this weekend highlighting the often repeated phrase: “There are no called strikes on Wall Street.” The timing of his writing this piece is no accident, and it is applicable here. Faced with a binary event that has the possibility to send markets spiraling in either direction, the best move is to step aside, let the emotional participants battle it out, and hold off establishing any new trades until the dust settles.
Here at All Star Options, we’re going to hold off entering any new positions until later in the week. We talked about a bearish $JPM position we like during our most recent conference call, but we’re going to hold off on that trade until all this election nonsense fades away.
All of our open positions, which can be reviewed here, all are defined risk spreads. If the market doesn’t treat them kindly this week, there’s likely nothing to do. No reason to panic. Our risks are defined, we already accepted the possibility of max loss when the trades were put on, so there is no reason to rush into a volatile tape and try to rescue any position that isn’t going the right direction. Just breathe and trust the process.
We’re going to stick to the plans as laid out for each trade. Plans don’t change because of the news.
In the meantime, we’ll be holding off on new trades until Thursday or Friday, depending on how the market moves over the next 24-48 hours.