August 21st, 2009
"This book provides a realistic look at trading commodity options without the textbook theoretical approach trotted out in many options trading books. It is a valuable book for all option traders." ~ Your Trading Edge Magazine, in reference to "Commodity Options" written by Carley Garner
OE and good housing numbers sparks rally
A swift dip in overnight trade was quickly reversed, and resulted in a move that brought the S&P approximately 30 handles from its low. Better than expected housing numbers and comments from Fed chair Ben Bernanke were likely to blame.
However, it felt like there were a lot of bears jumping on the correction bandwagon so I am sure that there were a lot of large bets placed. Now that the squeeze is on they are scrambling. It seems like much of the buying might have been done by short call traders looking to hedge their risk, AKA save themselves from ruin.
Bernanke's verbal declaration that the economy is near recovery gave the light volume rally reason to push even higher. According to the Fad Chair, "The prospects for a return to growth in the near term appear good." On the other hand, he did mention that consumers will continue to struggle to find credit and businesses will find it difficult to obtain financing.
Coming into Friday's session we were looking for higher prices, but were a little surprised at the day's momentum. Although we did state that "If things really get out of hand" the mid 1020's were possible in the S&P. Our relative targets in the Russell and NASDAQ were met in Friday's session and this leaves us leaning cautiously lower into early next week. The next resistance in the S&P lies at 1035 but it seems like a pullback could see a retest of 1000. We see the next resistance in the Russell is near 589ish but feel as though the market is getting near-term toppy. The NASDAQ could see 1655 or so, but we would be bearish from such levels. In the meantime, support could be found at 1608.
* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track 'n Trade, Gecko software.
**Seasonality is already be factored into current prices, any references to such does not indicate future market action.
Please note: A mini S&P chart is used because it is better for charting purposes, but trade recommendations are based the full sized S&P unless otherwise noted.
S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading
Position Trade -
July 15 - We like selling the August 975 calls, fills ranged from $7 to $9 today.
- July 28 - We recommended to sell the 925 puts for a little over $8 to take a bit of the heat off of the 975 calls
- July 29 - We recommended to buy back the 975 and sell the 995 to give the trade a bit more breathing room and lower the delta
- August 5 - We recommended to get into a more comfortable position ahead of the employment report by buying back the 925/995 August spread and selling the September 940/1045 spread for a credit of about $3.
Russell Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading
Position Trade -
Flat
Please note: A mini-NASDAQ chart is used because it is better for charting purposes, trade recommendations will denote whether a mini or full sized contract should be used.
NASDAQ Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading
Position Trade -
Flat
Carley Garner
Senior Analyst / Commodity Broker
DeCarley Trading
1-866-790-TRADE
Local : 702-947-0701
http://www.carleygarnertrading.com/
http://www.decarleytrading.com/
*Due to the volatile nature of the futures markets some information and charts in this report may not be timely.
There is substantial risk of loss in trading futures and options.
Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.
