Sang Lucci December 14th Pre-Market Update
Markets are in limbo once again. We've got literally no conviction to either side of the trade on the SPY at this point. We are in a serious gap and fade market with random ramps into the close. Overall this action is simply chop and leaning towards the fact that large buyers and sellers are indecisive as of which direction to push the markets.
We've been net short AAPL for a while now as the stock starts nearing dangerous lows. We played the 530 + 525 Puts yesterday and held about 75 contracts into today. So far so good. We'll continue to crank out in scalp mode on these trades here as AAPL starts testing through the 520 level. Clearly, AAPL is the main stock on our radar for today.
Market is still super choppy so be sure to catch the big movers and shakers early in the morning. Easy money is still made in the first 2-3 hours before the volume drops out, so if you're going to be active today do it early. I don't foresee us getting out of this range; the only reason why we would get a slightly strong directional move is the fact that Fridays have been a big spread writing day on both calls and puts for big movers. This just means that traders are trying to capitalize on minimal movement on the last day til expiration on weekly options. The entire week has been super slow, possibly enticing many options writers to write earlier in the week (dangerous). So any type of break outside of a range today would really cause a cascading effect because the writers would start covering, creating something similar to a giant short squeeze in either direction. Again, this is speculative but be on the watch.
Pay attention to your movers! If the move has no conviction on the tape, don't chase it, play through the equity or go light through some In-the-Money options.
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