I entered a new trade on Tuesday of long SPX 2000 Jan 20 2017 puts at 6.20.
I have a couple reasons for doing this:
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record highs on thin volume and terrible breadth don't look good.
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I think it's likely that the Fed will take high market prices as blessing the implied rate hike in December. This is the same story as December 2015. If that happens, I expect a similar market drop as in January 2016.
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I think a minor black swan event is possible if Yellen decides to stick it to Trump and raise rates by 50 bps or greater. I don't think this is likely, but there I rate the possibility as more than zero. Maybe 3% probability. If it happens, the market will see a big move to the downside.
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I think it's also possible we will see a buy-the-rumor-sell-the-fact on Trump's inauguration. If that happens we'll see selling into inauguration day (Jan 20).
Stop loss is 3.20
Leg 1 profit taking is 9.20, and trailing stops from there on.
Normally I sell short-dated options and ride theta decay, but with market where it is I figured some speculation on delta and gamma were worth it.
Submitted November 24, 2016 at 08:15AM by tamo42 http://ift.tt/2g7KxLx
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