Posted in
Big Picture
By: Tom Gentile
on March 10th, 2022
Quadruple Witching will take place Friday, March 18
That day should experience a great deal more options volume due to the options of stock index futures, stock index options, stock options, and single stock futures expiring simultaneously.
This situation causes many Money Managers, Hedge Fund Managers. Market Makers, etc. to not only worry about their current months options positions closing, but they also find themselves rolling out or opening up options on securities of a further out / next month out expiration.
This increase in options volume could lead to an increase in price volatility, but it doesn’t guarantee it.
What is going on is options Implied Volatility (IV) is elevated making options premiums on securities much more expensive.
Options Strategy Consideration
With Quadruple Witching coming up, possibly causing some price volatility coupled with higher than normal IV it is probably best to consider a Selling Strategy like a Put Credit Spread over a Buying Strategy like going Long a Call.
One can use one of my search tools from my online options analysis software ‘Tom’s Tools’ (www.tomsoptiontools.com) called Money Calendar to find a security (stock or ETF) that has a price history of trading higher 9 or 10 of the past ten years.
A bullish pattern history with that success rate is a candidate we would consider Selling to Open a Put Credit Spread on.
We have an opportunity to profit by Selling-to-Open a Put Credit Spread on the XLK, the Technology Select Sector SPDR Fund.
Since option premiums are priced higher than normal, this bodes well for the prospect of earning more money by selling to open a spread.
With a Put Credit Spread we want to position the option strikes where we don’t believe the stock will go or be trading at on expiration. We need the security to be above the sold strike of the spread to realize max profitability on the trade.
Take a look at the Money Calendar data on the Technology Select Sector SPDR Fund, (XLK). My company can teach you how to execute this strategy and we have videos in our library that can help as well.
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.