The Downside Probe, Will It Continue?
Another cautious day of trading ahead of today’s option expiration. The SPZ pit is awfully quiet, as many locals have already headed out to begin the weekend.
As I said in my morning comment, option expiration has become a non-event for volatility. Because of this, daytraders need to be extremely cautious buying rallies or selling dips when establishing positions. Why? Simple. The odds do not favor range extensions on these days.
How do I prepare to trade these sessions? I stay in my office until the final 60 minutes of trading, when I go down to the pit and look for a rally to assert itself. One thing that is definitely worth noticing today is the buying interest on the way down. There are bids every .50 down in the SPZ, and this action typically sets up well for the afternoon pop to the upside.
I would look to be a buyer below 1495 for a move towards 1508 on settlement.