If you are reading this from somewhere in the Midwest, I hope you are dry by now. The Chicago area was hit hard with heavy rain and flooding over the past few days. I spent a lot of hours of my life boating, but I’ve never thought about an Ark. If the rain here continues, I won’t be the only guy wishing I had one.
KEEP YOUR HEAD ABOVE WATER
Trading can often seem like riding out the storm. The key to both is keeping your head above water. Many traders felt the brunt of the selloff in gold earlier this week. I’m sure many of them wish they had a life jacket to stay afloat or high ground to run to. Unfortunately that’s not how trading works. The only thing to keep you afloat is your risk management.
KEY LEVELS
The S&P 500 has had a bit of retracement that last few days. The 1550 level has become a resistance line from a technical and psychological level. If the market can close above 1550, we might see another push to 1570. I am trying to take advantage of that possible move with a 1570-1590 call spread in the June E-Mini S& P. I like trying to buy the spread at eight points ($400.00) or better. Since we are long option premium our risk is defined to the cost of entry plus commission and fees on the trade. I am looking for a target exit of 10 points from entry. Aggressive traders may want to stick around to see if they can get full value of the spread at expiration. The June E- Mini S&P options expire on 6/21/13.
KEEPING PERSPECTIVE
It has been a stressful week for many people across the country. We have seen horrific events on the TV and news multiple times over the last few days. Trading can be fun and hopefully profitable at times. It is a livelihood for some, and a hobby for others. Just remember to give it is proper place in life and not forget about the things that give you real value, your family and friends.
RISK DISCLOSURE: THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES AND OPTIONS TRADING. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. THIS REPORT IS A SOLICITATION FOR ENTERING A DERIVATIVES TRANSACTION AND ALL TRANSACTIONS INCLUDE A SUBSTANTIAL RISK OF LOSS. THE USE OF A STOP-LOSS ORDER MAY NOT NECESSARILY LIMIT YOUR LOSS TO THE INTENDED AMOUNT. CURRENT EVENTS, MARKET ANNOUNCEMENTS AND SEASONAL FACTORS ARE TYPICALLY BUILT INTO FUTURES PRICES. A MOVEMENT IN THE CASH MARKET WOULD NOT NECESSARILY MOVE IN TANDEM WITH THE RELATED FUTURES AND OPTIONS CONTRACTS. THIS REPORT IS A SOLICITATION FOR ENTERING A DERIVATIVES TRANSACTION AND ALL TRANSACTIONS INCLUDE A SUBSTANTIAL RISK OF LOSS.
