After Another Low-Close SPX, Now What?

Yo Pit Crazies,


SPX is finally selling off …


At a whopping .5% per day.


At this rate it will take us until Christmas to see 4,000 again.


Forgive me if I’m being grumpy. But it is slooow.


If you like buying stocks cheaper, it’s not grumpy. It is patient.


Some SPX put butterflies are starting to look tasty.


So let’s take a gander.


Edge Hunter Telling the Tale


The more the market or a stock grinds around, the more interesting butterflies get over short durations.


Notice the SPX Sept. 22 4455/4405/4305 put butterfly below. The risk/reward ratio is 5-to-1. 


Pay $16.55 to make $83.45 is not too bad for a debit-only risk trade.



This is a 2/3/1 put fly. The ratio of 2 long, 3 short and 1 long put helps generate the good risk reward ratio.


The green box in the figure above is the edge for the trade, which, granted, is skinny at .01%.  Also the cost of an ATM SPX put fly here is quite low.  


If the market slides around, this fly will perform great.


The Lesson: Fit the position to the condition. Every condition has an ideal position.


The Rundown


Capitol Gains w/ Frank Gregory
Option Pit DC and Wall Street insider Frank Gregory and I run a portfolio approach to trading options with stocks that have good long-term prospects based on Frank’s K Street knowledge and my options expertise.

      • I added a couple of hedges in Pfizer (Ticker: PFE) and Guggenheim Solar ETF (Ticker: TAN).
      • My Cap Gains Portfolio is net long Vega and puts, so let’s see some action!


Pro Trading Room:
The Pro Room is Option Pit’s live access to Mark and myself during trading hours. Our Pro students post trade ideas with Mark and me during the entire trading session. 


      • Mike P. giving me props on a 100%+ FLY WIN.
      • And he’s still riding a couple more.


Sharp Bets:

Each week, Option Pit CEO Mark Sebastian looks for low-volatility, mid-term duration call buying and put buying opportunities.


      • Mark is hopping into some Wells Fargo (Ticker: WFC) calls.
      • A great run in Sharp Bets for the last couple of weeks, including five wins in a row and top-end gains of 106%.

Volatility Edge & Volatility Trading Club:

Volatility Edge is run by Mark and uses the proprietary Option Pit VIX Light indicator to guide volatility trading. The Vol Trade Club is run by me (AG), and employs a long strangle strategy that seeks to use VIX future decay to pay for upside VIX, VXX and UVXY options.


Volatility Trading Club trade No. 257 closed yesterday for a 25% win overall.  I am leaning short the QQQ and SPY, and some in the VTC.


Remember, a lot of vol strategies I use are market neutral. That means whether SPX or VIX go up or down, the positions still make money. This is a technique you can learn in the Volatility Trading Club and Volatility Edge!


To Your Trading Success,



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