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Trading Update March 19th

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Broad indexes were all over the place today due to random Cyprus news spikes. Early in the session, fears mounted over the Cyprus vote being delayed and the Prime Minister resigning. By the close, however, the Cyprus Parliament rejected the proposed tax on bank deposits. We went from bearish to bullish in a matter of minutes making intraday traders pay for developing any kind of directional bias for the day. Most sectors ended up in the red but many single stock names were able to retrace a significant amount of losses before the bell.

Tomorrow we're going to see comments from the FED concerning monetary policy going forward and many investors/traders will be watching for hints at a possible end of the current QE program. Ironically, the last reversal in the markets came right on the backs of the FOMC minutes.

The only stocks that really remained in the green today were Bank of America (NASDAQ: BAC) and Google (NASDAQ: GOOG). I myself got shaken out of some credit spreads on Apple (NASDAQ: AAPL), thinking the stock was going to hold up around $455 – $460. Unfortunately, with environments influenced by news events, holding onto anything becomes quite difficult.


The stock saw some continuation off the open from yesterday's bullish move higher. From this morning's headlines, one would have assumed that Cyprus was no longer a real issue as they decreased the tax on deposits and it seemed like everything was in order. Of course, that assumption turned out to be wrong as the onslaught of news forced the futures down significantly lower throughout the morning session. It didn't matter what stock you were in, there was temporary panic felt across the board including in this Apple. I chose to write some out of the money puts and realized I may have gotten too heavy too soon…


Off the open, I was aggressively selling these contracts assuming the time decay would start seeping in very quickly. Once the stock went negative on the day, that's when this option started to see some buying activity. The weakness continued and the stock retraced down under $450 and that's where things started to get a bit dicey. At the time, it felt like the Cyprus news was enough to start a major pullback on the markets so I bought my contracts back and took the loss instead of having the conviction to wait it out until the close. The stock, of course, rebounded back to $454 and this option got completely buried. After taking the loss, I'm now quite convinced this option will expire worthless I was just a tad too early…

We're still working on our writing strategies here at, so stay tuned to see the progress!

Stick with Lucci!

The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Posted-In: Options Markets Trading Ideas


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