A Little Support There
18th January 2009
Just when you thought investors might be ready to throw in the towel once again, it did find some support at the levels I suggested in my last post. The DJIA held support at 8,000 and the SP 500 held support at 815. The market seems to be treading water while it waits to see if there is just one more shoe to drop in the financial crisis.
Credit spreads may be the way to go for the February options expiration. For example, Sell Feb SPX 950 Call and Buy Feb SPX 975 Call, or Sell SPX 800 Put and Buy SPX 775 Put. Trading both of these together will leave you with an Iron Condor, which will give you even better profits if the SP 500 stays between 800 and 950. If I had to pick between them, I’d say the call spread has the better probability of success.
JD
