It was a slow but profitable week for us at SPX Option Trader! We only traded 1 day this week due to market conditions.  We ended this past week with +13% ROI in our SPX weekly option trading, +5% ROI in our SPY weekly option trading, and 0% ROM in our SPX Spread Trader.  The FOMC meeting and high price of options caused us to sit on the sidelines for most of this week. As we’ve explained in the past, when the price of the options is too expensive, it is not worth the risk to trade in our opinion. For example, when the option on SPX is near 30 a contract, it means the SPX must move 30 pts just to make 100% profit. That historically has not been a good risk to reward ratio. Because even if we see a huge move in the market, we only stand to make 100% and we are still risking a -70% loss. We prefer to trade when we can make over +100% gain with about a 15 point move.

No matter the price of the options, we still provide our SPX Daily Outlook each day, so a trader can certainly continue to trade the market on these days, if they have the stomach for the risk. For example, this past week while we only traded 1 day, our forecasts were still accurate and we hit all 3 levels every day of the week!  But we believe it is best to wait when options are so expensive and not take the risk. We’ve seen this happen before and eventually the volatility will settle out and the markets will return to more normal trading. Until then, we stay consistent and trade only when conditions are favorable. We look forward to what this next week will bring. Below are our comments for each trading day of this week:

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