I don’t know the answer, but will keep an eye on certain levels in the major indices and manage risk to trade another day. Everyone, including the bulls, have been calling for a pullback and it’s healthy to have pullbacks. Problem is that if you don’t know the difference between a pullback or trend reversal you can lose and lose big. I will continue to focus on selling premium at support and resistance levels and take the occasional directional trade.
Luckily though I have someone on the “inside” and they pump information to me all the time. In fact, they sent me a screen shot from one of the PPT team’s pc tonight which shows a chat between “Big Ben” and “Long In The Tooth”.
Seriously though, I know this and that is time is the enemy to option holders and I will continue to do what has worked in the past until it doesn’t work. That does not mean that I’m complacent or lazy, but rather consistent. Not every trade is a winner for me but through risk management and analysis on MY end (as opposed to taking someone else’s word/research) I am doing just fine. Where I can get into trouble, and where I’ve seen others fail as well, is when I get lazy and don’t do the legwork.
On that note, I’m quietly looking for stocks that have had stellar runs and it makes sense because of the sector they are in or the product/service they provide, etc. and building a watch list. I’m talking stocks like $IBM, $PEP, $WDC, $BLK and even $AMGN as those are names I wouldn’t mind owning. I’ll look for pullbacks to support and then sell some puts at that level or slightly lower. If I don’t have the cash to purchase the stock outright then I’ll purchase an even further OTM option for protection.
*Full-disclosure: long IBM and BLK at time of post.