Market Morning Action

As a trader, these are the types of mornings that make me old fast.  😉  The market is set to take a serious hit this morning and I am holding DE calls that will most likely lose half their value.  Last night there was a slight ‘flash’ crash in futures.  S&P futures fell almost 50 points in 30 minutes but rebounded 60% of that loss in less than a minute.  Currently futures are down 18.  Relative to 2008 and some of the market corrections since then, being down 18 is no big deal but given the technical picture of the market it is highly unexpected.  The market is down because congress walked out ahead of voting on a fiscal cliff package.  Party politics once again won out over common sense and elected officials continue to choose putting our country at significant risk ahead of compromise.

So what do I do?   Fortunately I am in about 50% cash.  I only have one position in DE to deal with and it is breaking its technical parameters and telling me to exit on the open.  If market news were normal and stocks were trading lower, I would exit DE and move on, but since there is this outlier event, I am going to hold onto DE throughout the day.  I suspect much more will be said in Washington today and that the selling may be lessened as the day wears on.  In reality, a morning like this shows the benefits of trading options.  Options can lose all of their value but their potential increase is always greater than the potential loss since the loss is limited.  I will be in touch.


Posted on December 21, 2012, in Jeffs 3k-100k. Bookmark the permalink. Leave a comment.

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