MTM Options Trader Newsletter - Have You Ever Thought About Modeling?

This Week in the Market The market continued to act in a volatile manner last week, with only the Dow unable to close in positive territory. Lower closes seemed inevitable heading into late last week, but buyers found their way again on Thursday. Confidence among market participants that inflation concerns may be kept in check because of the lack of significant sanctions against Russia (particularly oil and gas) seemed to calm traders despite the military action in Ukraine. We will see how it all plays out heading into this week. As far as technical analysis goes, the three major indexes are all well below their 50- and 200-day moving averages. The 200-day will be the first significant resistance (target level) for each with a continued move higher. Quarterly earnings remain slow, but several retailers are set to announce this week. In addition, a few economic reports are slated for release this week (noted below), including the latest jobs report due out before the open on Friday. The next Fed meeting, which most likely will be a pivotal one, is still a couple of weeks away. Remember, better to be out of the market wishing you were in than in the market wishing you were out. Have a safe, happy and prosperous week!

Feb 28: Trade in Goods Mar 1: Construction Spending Mar 2: Beige Book Mar 3: Jobless Claims Mar 3: Productivity and Labor Mar 3: Factory Orders Mar 4: Unemployment Mar 4: Consumer Credit Read Our Blog

Have You Ever Thought About Modeling? I was working with one of our student traders recently, and we spent a lot of time talking about modeling… trades, of course. Duh. Modeling option trades is an underused part of any proven trading methodology. I'd go as far as saying that trade modeling should literally be done on every single trade. It's important stuff! What Is Option Trade Modeling? As much as I'm an options Greeks guy and talk about their importance relentlessly, it's also important to acknowledge "the other" risk management tool: option profit and loss diagrams (or simply, option P&L diagrams) used for trade modeling. Continue Reading ... MTM Watchlist Here are a few trade ideas we will be pondering in group coaching class this coming week: NVDA – After testing its 200-day moving average, the stock rallied like the market. Potential bull put spreads around the moving average will be explored. NFLX – The stock rallied hard on Thursday but struggled to move higher on Friday. Additional bear call spreads will be considered. SPY – This trade idea might not make sense with another bullish move higher on Monday, but the ETF has strong potential resistance from its 200-day moving average. Bear call spreads around and just above the moving average will be considered if the market cooperates.

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The strategies in this newsletter are for educational and informative purposes only. All information disclosed in this newsletter should not be considered complete in its entirety. Market Taker Mentoring, Inc. will not be held responsible for changes, oversights, errors or omissions. Dates, prices, news and other information may not be accurate. Please verify all information before trading. You alone are responsible for your own investment decisions. Options involve risk and are not suitable for all investors. Before trading options, please read Characteristics and Risks of Standardized Option (ODD), which can be obtained from your broker; by calling (888) OPTIONS; or from The Options Clearing Corp., 125 S. Franklin St., Suite 1200, Chicago, IL 60606. No statement in this newsletter is intended to be a recommendation or solicitation to buy or sell any security or to provide investment or trading advice. Traders and investors considering options should consult a professional tax advisor as to how taxes may affect the outcome of contemplated options transactions. Copyright Market Taker Mentoring, Inc. 2008 - 2022. All rights reserved. Reproducing or redistributing this content is a violation of federal law.

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