What had been a mediocre, oversold rally failed right where such rallies normally do -- at the declining 20-day moving average. It just so happened that the 200-day moving average of $SPX was in the same area. That was just over a week ago. Then, $SPX quickly declined to the lower edge of the trading range (near 5500) and found support once again.
With the recent market sell-off, some traders have been shifting from selling puts to writing covered calls. The argument is that selling puts in a declining market is riskier, while covered calls provide a safer way to generate income. However, this belief misunderstands the fundamental equivalence of the two strategies.
The put-call ratio is a widely used sentiment indicator in options trading, helping investors gauge market positioning by comparing the volume of put options traded to call options. However, there are two primary ways to calculate this ratio: the standard put-call ratio and the dollar-weighted put-call ratio. Understanding their differences can provide deeper insight into market behavior.
Each day, The Daily Put-Writer newsletter provides a list of potential naked put-sale candidates, selected using McMillan’s proprietary put-writing methodology. In addition to the daily list, we highlight specific trading opportunities when conditions are favorable.
Today’s Put-Sale Candidates
Below is a sample of today’s top put-sale candidates:
Join Larry McMillan as he discusses the current state of the stock market on March 17, 2025.
A short-term buy signal was triggered at Friday’s close: the “oscillator differential” buy signal. This occurs when the two breadth oscillators, which had spread far apart in recent weeks, come back within 200 points of each other. Historically, this has been a reliable short-term, one-week buy signal.
The market, as measured by $SPX, continues to fall at a rapid rate. It has broken down below the lower end of the trading range that had existed since last November. It also broke through a support line at 5670 (higher horizontal red line on the $SPX chart in Figure 1). The next support area is likely to be near 5400, which was last September's lows.
Over the years, I’ve written extensively about the $VIX/SPY hedged strategy, a position that allows traders to take advantage of the inverse relationship between volatility and the stock market. The strategy is designed to profit from large market moves in either direction, but its real power emerges when an “edge” appears—such as when $VIX futures trade at a sizable premium or discount to the $VIX index.
