Trade Update – Let’s pick up some premium when the unemployment number is released this Friday

Question:  What if the unemployment number this Friday really disappoints and the markets tanks?  Any chance we could still grab some additional premium on the bottom with the 50 day SMA right at 600?  Maybe a 600/590…..right now it only has a .20 natural spread.  But a decent pullback on Friday would add some $to it.

Response:   Absolutely.  I think we should pick up some premium within 2 hours from when the unemployment numbers are released this Friday.   If the market rallies, let’s open some bear call spreads, and  if the market sells off, let’s open some bull put spreads.  Once the market moves, it’s my guess that the market will stabilize rather quickly as investors/traders/money mangers await Q4 earnings that start to come out next week.   I’ll send out an advisory tomorrow, Thursday, with my thoughts on strike price placement.

Comments (2)

Ed EvansJanuary 7th, 2010 at 8:56 am

Hi Brad,

Given the postive tone of the news and the probability that tomorrow’s unemployment number will be acceptable, shouldn’t we be addressing the RUT puts today since, at this point, the market is down?

If we wait for Friday’s pre market unemployment news and an update coming from you Thursday night (?) we might not get much for the puts this cycle. As of 9:55am Thursday the 570/580 put mark is $.15 and the 590/600 put mark is $.475 (if that’s a -safe- and valid possibility given the comments/response on the last trade update).

Thanks.

bradrrJanuary 7th, 2010 at 2:31 pm

Hi Ed,

Yes, I agree that we should bring in some modest levels of premium for tighter SPY and RUT Jan bull put spreads, per the advisory that I sent out this morning to MCTO subscribers. Unfortunately, as most of us saw, the DOW was down 60 at the open where we did have some opportunity to open some SPY and RUT Jan bull put spreads, and then the market quickly climbed back to neutral and the premium dried up in less than an hour. The market most likely will move tomorrow, Friday, when the jobs number is released so we’ll probably have another oppotunity to bring in some more premium.

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