A few months back at the 'How to Always Know the Perfect Time to Exit a Spread' webinar we talked about how to "Take the Money and Run!" That is, whenever a credit spread has less than $0.05 cents remaining, we close out the trade and bag our profits no matter how much time we have left.
As we approach October expiration, let's consider closing out of any plays that have earned the vast majority of their credit---from about Wednesday on the market makers typically widen their bid/ask spreads making our exits less efficient so either Tuesday’s close or Wednesday’s open would be a great time to close trades early. And depending on your risk tolerance, you may also even consider closing them out a bit earlier.
Of course there’s always the “option” to ride your trades to expiration and avoid further commissions---they’ll just expire worthless and you'll keep all the credit---a great position to be in!
There's a lot more details on these and other exit strategies inside the Package Buyers' area of the website--for those of you with The Winning Secret trading package, you can just log in, click on the Video Tutorials tab and select the webinar you'd like to watch. And if you don't have the package yet, you can add this critical information to your trading library right here.
Trader’s Tip:
Historically,
• September is the biggest percentage losing month for the S&P, Dow and NASDAQ.
• The S&P 500 tends to have a disappointing closing for the month because of mutual fund restructuring.
• September is a Triple-Witching month which is always dangerous especially the week after expiration!
Key Dates:
• September 16th--options expiration for some indices.
• September 17th--options expiration for all equity and all other index options.
• October 14th--options expiration for some indices.
• October 15th--options expiration for all equity and all other index options.
• Friday, September 17th, is a bearish, triple witching, trading day.
Market Outlook
The Dow has been up 7 out of the last 8 days on economic optimism, continuing the rally which began nearly two weeks ago thanks to a few 'slightly better' economic reports. The latest report indicated that wholesale inventories shot up in July---a sign that confidence in retail sales is improving. It seems consumer confidence is definitely picking up and the labor market, although weak, is improving too. Slow but steady progress.
So far, the September rally only paused once and that was when concerns about the European financial systems ignited again. With such recent pessimism about the economy any glimmer of hope seems good enough to please investors and launch the markets higher and higher.
Also just announced...better-than-expected 2nd quarter growth and a new $11 billion stimulus package for Japan. It seems Japan's economy wasn’t quite as weak as first reported---but, of course, they still need help. Their revised numbers showed their GDP rose to an annualized rate of 1.5% during the April-June period---a major improvement over the 0.4% reported last month putting Japan on par with U.S. growth rates.
Meanwhile, back here in the good ole USA, hopes are rising as jobless claims continue to decrease and new filings for jobless benefits tumbled to a two-month low. The Labor Department reported new claims for unemployment dropped 27,000 to 451,000---an encouraging sign even as the overall economy continues to lose momentum.
In another positive sign, the government announced the trade deficit has narrowed significantly as exports climbed to their highest level in two years. These recent reports combined with “less bad news” mindset seem to have eased fears about the economy and maybe, just maybe, the US might not be falling back into a recession after all.
Still, this historically bearish time of year versus the unusual bull rally we’ve seen over the last few weeks has most investors pulling out their hair. Fortunately for us, we’re not very concerned about market direction---only about the magnitude of the move. And with that mindset, we wrap up October with two new high probability, high profitability trades...
What are the Secrets of the Week?
Our first play has been trading in a consolidation pattern since June and is now pushing up against institutional resistance--a sign that it could be heading downhill again soon. Our second play has been trading well within our short strikes since May--a perfect neutral candidate for a high-probability iron condor.
Both plays are on ETFs and generate a generous 8-10% profit with an over 91% probability of success---and with only about a month’s time for these trades to play out, we definitely have the trade winds blowing in the right direction as we set our sails toward profitability. Let's get started...
You can get in on this week's trades along with two new high-probability trades per week by clicking here now: www.cashflowheaven.com/ws
Stack the Deck on Every Trade,
Robert
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