With the market currently selling off after a substantial bull run, it may make sense to learn about protecting your stock portfolio. Our archives are filled with valuable articles that delve into various strategies for safeguarding your investments. Here are some highlights:
Small cap stocks joined the "party" about a week and a half ago. They were late to do so, but were able to push $SPX and many other indices sharply higher. They brought with them improved breadth figures and new all-time highs for $SPX.
Unfortunately, their inclusion seems to have created such severe overbought conditions that a correction is now underway. Sell signals are beginning to emerge, although it is not clear that the bull market is over.
The market continues to trade higher, and the pace is accelerating. Moreover, the euphoria that has been enjoyed by $SPX now seems to be spilling over into the small-caps such as the Russell 2000 Index ($RUT; IWM). The inclusion of the small-caps has expanded breadth, so that is no longer a negative divergence. In fact, Cumulative Volume Breadth (CVB) has been making new all-time highs right along with $SPX -- almost every day in July. This is no longer just a NVIDIA (NVDA) market.
With the market at high levels and many investors holding significant unrealized gains, it's important to consider portfolio insurance. Derivatives like futures and options can help shield your stock investments from potential losses.
Stocks have traded in a tight range for several days. While there's some divergence between $SPX and the broader market, the trend remains upward with $SPX hitting new highs. Support levels are at 5400, 5350, 5260, and possibly 5450.
Equity-only put-call ratios are moving sideways near the lows of their charts. This is an overbought condition but not a sell signal. These ratios need to rise sharply to confirm a sell signal.
In this article from our archives, we delve into the intricacies of option decay, focusing on the differences in how in-the-money (ITM), at-the-money (ATM), and out-of-the-money (OTM) options lose value over time. Recognizing these decay rates is crucial for traders to make informed decisions and develop effective strategies. Here are the key highlights:
Key Points
Decay Rates:
Join Larry McMillan as he discusses the current state of the stock market on June 10, 2024.
We all know there are risks to 0DTE trading – mostly the swift time decay, changing delta and gamma, and potentially violent price moves by the underlying. But serious option traders are not deterred by those things; they can avoid most of them by merely paying attention. It then becomes a matter of how much time do you want to devote to a daily trading strategy. But this week, I read about a different kind of risk – one that I was not aware of, but which is apparently very real. To give credit where it’s due, the following article is based on this article by Cabot Wealth.
