Today: October 24th, 2008
My prediction on breakout possibility yesterday was happen today. Following global recession fears and Asian & European stock market slid, SPY sold off by 5.50 points on market open. The VIX jumped to high level of 80, showing signs of market biggest fear.
There is support on SPY 85 (see above chart) and market rebound a bit. If this support line is breached, I assume market will go a free fall.
So, what to do next for an Options Writer? This market is unforgiven so you need to be patient. I will not dare to go long as a contrarian (as usual), but will wait market to rebound. If that is so, a decending triangle is formed. It is wise to go short when market rebound approaching the resistance line (SPY 97/98), however, you just need to be patient.
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