Why I am not trading on margin this week

THE WEEK

Another very quiet week for the Stock Market.  On Friday there was a new 52-week high was set.  What I found interesting is the VIX, which is an inverse indicator that measures Traders’ fear and unrest, broke higher.  With the Market trading higher, one would expect the VIX to drop. (Inverse indicator)  I have drawn lines on my VIX charts that show historic levels of fear and greed.  I even named each of the areas.  Right now, the VIX is trading between $20 and $25.  I think of this area as high tension area.  Even though the Market is going up, Traders’ are not comfortable and are starting to get a little fearful and are expecting a Market down turn.  Do I set up my trades with this in mind?  No.  But I have become more cautious and am only trading the very best setups.  No marginal trades right now for me.

SPY

VIX

LOOKING AHEAD

There are no major government economic announcement scheduled for next week.  It is, however, the start of this quarter’s heavy Earnings Announcements.  Two weeks ago, nearly 50,000 members of the International Longshoremen’s Association (ILA) went on strike  against the nation’s East and Gulf Coast ports.  The strike stop the flow of a wide variety of goods over the docks of almost all cargo ports from Maine to Texas.  On October 3rd  a deal was reached to suspend the strike until January 15, 2025 giving everyone time to negotiate a new contract.  The economy seems to be in good shape even with the strike that disrupted and slowed down deliveries of goods and services.

HOW AM I DOING?

It was another good week with a little over 9% profits racked up.  I did not have many trades on because I was very picky about the trades chosen.  What helped boost my profits was the increased Implied Volatility as traders grew more and more uneasy with the current Market trend.  The gradually increasing volatility added addition premium to my options so when I sold I got even higher returns.

This Thursday’s Webinar

 I know we have covered this topic before.  I feel it is so important to understand that we are delving into it again. 

IMPLIED VOLATILITY

And how to use it to increase your profits

This is especially important with the advent of a new earnings season.  You should expect volatility to be a little crazy.