Mid Day Trading Update – The Overnight Short

Folks holding shorts overnight were the ones who got paid out in full off the gap down this morning. It was tough to take the risk overnight though considering how bullish the sentiment has been as of late. Profits should have been taken during the morning session as the dip buyers have now come back in force to push the indexes near yesterday’s closing prices.

The volatility off the open was pretty wild this morning and many traders got stuck on the short side after feeling left out by not participating yesterday or holding overnight. Once the Home Sales figures hit and the market rebounded, the shorts got burned pretty badly and put premiums disappeared quickly.

To my surprise, this Bank of America BAC has made a $.50 retracement from the lows of the day and went back into positive territory around $13.30. This shows me that this sell-off could most likely just be a temporary thing and dip buyers are still very much interested in even more all time highs. I’m imagining though the markets start to get a little choppy and directional traders will find it difficult to produce the same kind of alpha we’ve been able to for the month thus far. This opens up the door to a lot of writing strategies.

If you missed the webinar yesterday on some of the differences between trading weekly options & monthlies, be sure to check it out as well all our other trading webinars!

Stay tuned for futher updates!