Due to the recent volatility of the stock market and a few technical indicators we follow, we feel that it is a good time to take advantage of the Time Decay feature of the Option.
We feel the E-Mini S&Ps have made a short term high, and are poised to make a turn lower. The RSI climbed through 60 on Monday signaling Over Bought conditions and Volume has been consistently declining which signals to us it could be rolling over.
Our trade ideas: Credit Spread in the June E-mini Call Options:
SELL the June 2760 Strike Call Option while simultaneously BUYING the June 2780 Strike Call Option.
Enter the trade as a Limit Spread order at a Credit of 8 Points to the Sell side. This would be a premium collected of $400 (minus commissions/fees.)
Your risk should be limited to the Spread Value (20 Points X $50 = $1,000 minus the premium collected so, we estimate risk to be around $600 + commissions and fees.)
The options expire in 30 Calendar days. (approx. 21 trading days.)
We feel the market is currently “news driven” and will maintain the current trading range that will allow the Options to expire worthless come June 15th.
At the time of this writing, the June E-Mini S&P is trading around 2716. The last time we were above 2760, was on March 16th. If we approach the 2750 area, we will update the Trade.
The views and opinions expressed in this letter are those of the author and do not reflect the views of Halifax America or its staff. From time to time persons affiliated with Halifax America, LLC may have positions in recommended and other derivatives. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed. This information is published to assist you in analysis and evaluation of the futures and options market. However, any decisions you make to buy, sell or hold a futures or options position on any research are solely your own and are not in any way deemed to be endorsed or attributed to Halifax America. Copyright Halifax America, LLC.
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