Options Outlook for the Week of September 1

Recap: Another bullish week but not without its share of ups and downs. The volume was lightest all year so moves were easier to accomplish. Next week, volumes are expected to rise so moving markets won't be as easy. However, next week is full with events that are potentially market moving. Of note is the Beige book on the 3rd. A day later we get the ADP employment but also and more importantly the ECB event. Draghi is expected to actually shoot the bazooka he's been threatening to use for years. Before we can recover from the ECB aftermath we will get hit by the government jobs report. This too has the potential to really move markets. My overall notes about what to expect next week: The ECB event could cause a rip but it also has the potential to disappoint a lot of longs and some serious selling could ensue If the economy is truly getting better then we should get strong jobs numbers which WILL cause markets to take good news as bad and hit the sell button You are starting to see how one can argue the long and the short side of next week's action. Why? because they are binary events: we not only don't know the outcome of the event, we also don't know how traders will react to that outcome (double coin flip). So how to trade it? I wouldn't... meaning I would NOT sell risk in next week's options. Instead I would take those same directions but use at least two weeks out or longer. I can still participate without the risk of getting blown out in a whoosh up or down. Find the ranges and build a BIG buffer then set the trades and manage them so they don't get out of control. What I am doing: Taking lottos: On high volatility and binary events I like to take lotto tickets where i pay a little for a long shot trade that pays really well. Tickers there include: PCLN, WYNN, LNKD, TSLA, CMG, NFLX, AAPL, etc. We are too high for many new longs so any longs here are to hedge short plays Avoid chasing pops - selling pops UNLESS there is a fundamental change (none so far). Apple levitated the markets this week on some strange price action. I am not so sure that it will repeat its performance next week. I want to sell risk outside the ranges which I will post Tuesday pre-open If I am too long then I hedge If I am too short I book some profits even if I leave money on the table. Bears have not yet given up the 2000 line in the SPX. Tentative range is still 1950/2000 but this is based on action before today's action. Variables still on my radar: ISIS: President Obama 'has no plan' ... yikes. Gaza. Violence escalates yet markets not reacting. Ukraine: Messy and limited duration of market impact. Too complacent. Fed/Yellen: She is waiting for something to break before she acts. So far, we are lost as to what to watch for signs of rate tightening triggers. Asian financial issues stemming from experiment economics in Japan or aggressive growth in China Earnings: These are last on my list of worries.