Option Queen Letter By the Option Royals Jeanette Young , CFP ® , CFTe, CMT, M.S. 4305 Pointe Gate Drive Livingston, New Jersey 07039 www.OptnQueen.com [email protected]June 19, 2016 This past week, options went off the board without a hitch, the futures moved to the September expiry, and the FOMC acted as they were expected to (they did nothing). There was enough bad news out of Florida for a life-time. We can only hope that very tragic, horrific event\ will not trigger more copy-cat shootings. As to the horrible incident in at the Disney resort, there are no words to express the sadness of this incidence. The summer doldrums will be accented this week with the vote on Brexit which should cause a violent reaction on Thursday and probably Friday as well. We do not expect to see much action in the markets until this is sorted out, then, fasten your seat-belts. If we were smart we would buy both call and put options on the financials which, stand to feel either immense pain or immense joy. Alas, these options are costly and only one side will have any value. Perhaps the better strategy is to purchase options on companies tied to gold, maybe the miners. The metal tends to act as a currency and surely will react in the wake of Brexit. This is likely a less crowded, and hence a less expensive trade. Then again there might be no reaction….we doubt that. The S&P retreated just .50 handles (points) in the Friday session. What we see is a doji like candlestick on the chart. The market has not moved out of its range. All the indicators that we follow herein are issuing a buy-signal. The volume actually fell for the last part of the week hitting a peak on Tuesday the 14 th of June. The range is from 2022 to 2118.50 with the old high at 2128.75. The Bollinger Bands are contracting at this time. The Market Profile chart shows us that the range of the trade contracted in the Friday session. The most frequently traded prices were 2081 and 2077. The weekly chart shows a clear range bound market. All the indicators are issuing a sell-signal. The monthly chart shows the clearest picture of this range-bound market with an expansion of the lower levels. The indicators for the monthly chart are mixed, or diverging. The RSI is pointing lower, the stochastic indicator is curling over to the downside and our own indicator is pointing higher. What is obvious is the decrease in volume. It is quite likely that the market will back and fill until the announcement regarding Brexit on Thursday. Following this, , look for the volatility to spike.
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