Options Trading Monday Briefing
In afternoon activity we’re seeing a broad but relatively thin switch into risky forex market currencies. Doesn’t seem to me to be convincing. The market has reversed it’s earlier predicted losses however unless the forex market shift increases in conviction we still expect a modestly negative close. It’s tough to read a mixed market – overall day showing risk-averse but intra-day showing a little more risk tolerance. In past situations the overall day indicator has proven stronger.
Market – You Can Teach Me to Trade Something New Every Day
The learning lesson from the day’s activity is that when pre-market and regular market forces oppose each other expect a tight range with a real opportunity to close the day in the sweet spot of the binary option hedge and double position we talked about in Sept. 2009.
Binary Options Hedge and Double Was in Play from the Opening Bell
Trading activity today was a perfect example of how that scenario can play out for end of day expiration binary options. We saw the likelihood of a mid-day dip based on pre-market forex market activity, while also seeing a (we felt weaker) propensity for risky assets at the open.
This opening risk taking activity led to a small (but not insignificant) rise in the major indices (S&P 500 and DJIA were both up 0.4% +/- by 10am) creating the opportunity to buy binary options (puts) at a peak. Multiple opportunities followed to pick up the call side at the low throughout the day. End of day settlement between the peak and bottom made the close land right in the middle of the sweet spot.
Ain’t market indecisiveness grand?
