Tackle Today: A Rudderless Ship
May 9, 2023
Embrace Theta
Traders,
The equity market has been a rudderless ship of late. The downward pull of recession fears has been counterbalanced by robust earnings from mega-caps. As a result, price action has been choppy, with little ground gained by bulls or bears.
To wit, SPY tagged $411 nearly five weeks ago on April 3rd. This morning it finds itself flirting with the same level. Along the way, we’ve seen multiple breakout attempts in both directions to no avail.
Profits during such a time will most likely have been delivered by theta. It’s a cash-flow market. Said another way, time has delivered where direction has not. No doubt, we’ll eventually get back to trending in one direction or another, but it’s episodes like these that really emphasize the appeal of premium selling strategies like naked puts, covered calls, credit spreads, and condors.
Try them out.
Gino’s Gems
Chart of the Day: S&P 500 (SPY)
The range is proving sticky. Good luck having a strong directional opinion while it lasts.
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