If you joined JC and the guys on our live twitter spaces session today, towards the end you heard me venting my current frustration in finding good opportunities to make directional bets in either direction right now. It's tough sticking our neck out here.
But of course, as options traders, we are not limited to just directional bets. We can attempt to pull profits from sideways markets as well. And when volatility is still elevated in most areas, there are plenty of places to look to sell premium. And the best place to do that is in an instrument that we feel is likely to continue trading in a sideways range for a period of time.
Today's idea is one such ETF that has been mired in a nice juicy range for nearly a year now.
From a directional standpoint, there currently aren't any stock ideas on the board that are getting me excited to get involved in either direction. Bear markets can do that.
However, from an options premium selling point of view, there are some good opportunities out there. But best to stick with instruments that are showing signs of at least some near-term support and resistance.
One such instrument is in the interest rates space.
The team at All Star Charts lately has been talking about how a lot of stocks are displaying declining moving averages and share prices continue to trade below these downward-sloping moving averages. There is nothing bullish about that.
What it means is there is likely an avalanche of overhead supply in most areas of the stock market right now and therefore many rallies will be met with more and more people trying to unload their positions. This is a tough environment to be a bull in.
There is always money to be made in bear markets, but it requires a different skillset, steel nerves, and quick decisions. And whereas in bull markets, we love to put on bullish positions that have 6-9 months to play out so that we can let the underlying trends grind their way higher, in bear markets we like to take more shorter-termed positions because we need to take profits quicker. Bear market rallies are notorious for stopping out even the best of short positions.
With all this in mind, today's trade is in one of those names that have been in a persistent downtrend, and is trading below significant moving averages.
