Posted in
Daily Report
By: Tom Gentile
on January 31st, 2023
We generally don’t like to take a fresh option trade the day or two prior to the Fed announcement on Interest Rates. The market is pretty subdued with trading and there isn’t a real true trend going into the announcement and the price move is more flat than volatile so making a quick profit is tougher to find.
Then, when the announcement happens the markets will pop or drop or BOTH in the same last hour or two of trade, sometimes resulting in any options trades one had on the day or two prior to see gains and losses go back and forth and drive one nuts if they aren’t prepared for it. And not being prepared for it can result in one closing the option trade in all that back and forth and find out they got out prematurely.
Not only does this wild price action happen on the announcement, but the Fed Chair also usually speaks after the announcement explaining why the decision to raise or not and by how much if their was a raise in rates was made.
Its at that time the financial market analysts and money managers have to determine if the tone of the Fed commentary is dovish or hawkish, bullish or bearish, and based on that assessment they decide to either put their money to work or lighten their positions resulting in the markets selling off to a degree.
Rather than try and pick an option based on a market direction or instead of having to try and manage options trade you just put on while all this is going on can be a tough challenge for an options trader.
So why try to fight that battle. A consideration is to lay low and get a gauge of the Morning Report Lists and see where the activity is and maybe monitor or track the longer term to expiry options.
App: Toms Option Tools
Market Insight articles may show images of lists of stocks meeting a variety of options parameters like Unusual Call and or Put activity or Expensive IV found on my app Toms Option Tools.
Other times I will have other charts may work to amplify my educational points.
Those options data lists, however, can be found on my app Tom’s Option Tools. Use your device to search up and download this app and get free access to the Morning Reports section of the app.
Other parts of the app are available at a premium subscription rate, but the Morning Reports Lists are yours free.
Disclaimers
Stock and options trading has large potential rewards, but also large potential risk.
You must be aware of the risks and be willing to accept them in order to invest in the stock and options market. Do not trade with money you cannot afford to lose.
This is neither an offer to buy/sell/ or recommend a particular stock or option.
Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been actually executed, the results may have under or overcompensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with hindsight.
No representation is being made that any account will or is likely to achieve profits or losses similar to those shown.
Disclaimer of Warranties and Liabilities Tom Gentile and TomsTradingRoom, LLC including employees, consultants, and editors (“Publisher”) cannot and do not warrant the completeness or accuracy of the content found in our areas, or its usefulness for any particular purpose.
Tom Gentile and TomsTradingRoom, LLC also make no promises that our content or the service itself will be delivered to you uninterrupted, timely, secure, or error-free. Under no circumstances will Tom Gentile and TomsTradingRoom, LLC be liable for direct, indirect, incidental, or any other type of damages resulting from your use or downloading of any content on our site.
This includes, but is in no way limited to, loss or injury caused in whole or in part by our negligence or by anything beyond our control in creating or delivering any portion of Tom Gentile and TomsTradingRoom, LLC.
You are agreeing that you bear responsibility for your own investment research and investment decisions. You also agree that Tom Gentile and TomsTradingRoom, LLC will not be liable for any I, investment decision made, or action taken by you, or others based upon reliance on news, information, or any other material published by Tom Gentile and TomsTradingRoom, LLC.
Tom Gentile and TomsTradingRoom, LLC relies on various sources of information that we believe to be accurate and reliable. However, we make no claims or representations as to the accuracy, completeness, or truth of any material contained on our site.
Tom Gentile and TomsTradingRoom, LLC are educational portals, providing content for educational and informational purposes only. Neither Tom Gentile nor TomsTradingRoom, LLC are a broker/dealer. Investors need a broker to trade stocks and options and must meet certain requirements. All securities, futures, and investments data and ideas are offered to self-directed investors. All prices in USD unless noted otherwise.
A full disclaimer can be found here: http://www.tomgentile.com/legal_disclaimers.html.