VIX Reverses
The March and April out-of-the-money options
on Cabot Microsystems*
(
CCMP |
Quote |
Chart |
News |
PowerRating) appear to be expensive enough to consider
covered call writes. Because volume on Monday was low (or non-existent) on many of
these strikes, I’ll avoid mentioning any specifics. In other words, confirm that
the
market actually exists before attempting any trades.
The banks
(
$BIX.X |
Quote |
Chart |
News |
PowerRating), mentioned recently,
continue to hold up well. Continue to look for buying opportunities in calls and call
spreads here.
The cyclicals
(
$CYC.X |
Quote |
Chart |
News |
PowerRating) have formed a
high-level cup and handle. This suggests that their longer-term uptrend remains
intact. Look for buying opportunities in calls and call spreads here.
For you OEX traders, the VIX setup as a CVR I
buy signal on Monday. I would prefer a reversal signal from higher levels (see
Monday’s Stock Outlook) but it looks like a decent signal nonetheless. Look for
buying opportunities that seek to capitalize on a decrease in volatility. Be
warned, however, many of these strategies offer limited gains with the potential
for unlimited losses. Make sure you have a risk control plan in place or hedge
your positions.
Looking Ahead
Although they’re not really setup on a
short-term basis, the semis
(
$SOX.X |
Quote |
Chart |
News |
PowerRating) still look interesting from a
bigger-picture perspective.
Best of
luck with your trading on Tuesday!
P.S. Reminder:
Protective stops on every trade!
*See Monday’s Stock Outlook for more
information on Cabot Microelectronics.