Feb 11
What Path Will the Market Take?
Long term investors concern themselves with the current price of a stock versus its intrinsic value. They are not really interested in the path a stock will take so long as it increases in value over the years. On the other hand, day traders who scalp for profits only interest themselves in momentary ups and downs of the market. As an options trader you should be interested in how a stock or the market gets from here to there. What path will the market take? Having a sense of that will guide you in choosing your options trading strategy.
Free Video Shows What Changes Are Coming in the Market.
Investing and Trading Time Frames
It is February 11, 2022 as we write this. New inflation numbers are awful. The market headed down on the afternoon of the 10 thand is still going down today. Folks who do not really care are those who invested in the S&P 500 at the depths of the Financial Crisis when the index stood at 815. The S&P 500 this afternoon fell to 4431 by 1.51:pm so these folks have quadrupled their money over the last 13 years and are waiting for the bottom to fall out again so that they can invest more money.
Folks who purchased the S&P 500 at this morning’s peak thinking that it would rebound after yesterday’s slide are down 2.1%. But, folks who jumped in on January 27, 2022 are up 2%. Options traders who paid attention not only to the news but also the price of gas at the pump, the price of the last batch of groceries, and the sticker price of a new car were ready for what is going on now. On February 11 the S&P 500 wandered up and down with a slight downward trend until 1:25 pm Eastern Time and then took the elevator down from 4479 to 4428 by 1:46 pm before it started to wander up and down and then move up to 4445.
What Path Will the Market Take?
An options trader gets to pick the time frame for their trades. They get to choose their strike prices. By paying attention to the DRINCs such as with Russia’s threats against Ukraine, the action or inaction of the Federal Reserve, haggling instead of action in Congress, and the worst inflation in four decades an options trader can enter a trade when the market is stable and then profit from a slide in price. By using an appropriate hedging strategy a trader can limit potential losses and increase the likelihood of potential profits. As we noted in a recent article an options trader can profit as history repeats itself again and again.
Follow a Path to Options Trading Success
The up and down movements of indexes like the S&P 500 or individual stocks provide options traders with repeated opportunities for healthy profits. And, if traded badly, these price movements can result in huge losses. When the market wakes up and starts to move up or down the smart options trader does not trade alone. At Top Gun Options we work in trading squadrons like the Hunters, Solo Amazon, and Accelerated Retirement. During the Covid-19 market crash and again in the market recovery we made millionaires here at Top Gun Options. To learn how to trade options and to work with a successful trading squadron, check out our quarterly Full Throttle training.
