Midweek Options Update 10/21/20

Last updated on October 22nd, 2020

Another session of waiting for more stimulus news is the story of the day. We continue to see a low volume choppy environment and it will remain that way until we get an official announcement on the next stimulus plan.

SPY has found support again at the 20 EMA on the Daily chart. Until that level breaks on a closing basis it’s hard not to lean cautiously bullish. If that level continues to hold we could see another run back up towards the swing high at 354.00. Should we break lower the next support area is at the 20 and 50 SMA’s which are down around 340.00.

The next move will be dictated by the news cycle. We have the stimulus news as well as the upcoming elections and now we are heading into the heart of earnings season with many of the tech stocks releasing their earnings over the next 2 weeks.

We are continuing to stay as patient as possible as markets continue to react to every headline/tweet that comes out. When I say we are staying patient that means we are using smaller position sizes (50-75% of our normal size), more vertical spreads, and going out farther in time with the expiration cycles that we are using.

We want to stay active as there is always opportunity when using options as long as we know when to press it and when to be more cautious. The market is giving us warning signals that we need to respect. Staying as diversified as possible with the markets that we are using along with the options strategies that we are using is going to make a big difference over time.

In today’s Midweek Options Update video below we will cover where we stand on key markets going into the rest of the week. We will also walk through new trades that we are looking at on QQQ, SPY, TLT, GLD, PTON, ADSK, and JPM. Take a look and let me know if you have any questions that we can help with. Mike@netpicks.com

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