Weekly Options Recap 10/18/20

Last week was another week highlighted by news driven trading. We have talked about how the headline risk in this market would be extreme between now and the end of the year and that is exactly what we are seeing.

Whether it be Stimulus rumors, election rumors, pandemic news, or earnings numbers this market is completely focused on these headlines. This makes life tricky for active traders as there is no knowing when the headlines will hit. As a result we continue to take a conservative approach at the moment.

SPY made the high of the week on Monday last week at the 354.00 level. That is our near term area of resistance on the upside. Should we break that level this coming week the all time high is sitting up at 358.75.

That level could be hit on any Stimulus plan that is passed in the coming days. On the downside the 8 EMA on the daily chart continues to act as support at 346.00. We tried breaking this level on Thursday last week but the bulls stepped in and defended that level really well.

The volume did pick up on Friday to end the week approaching 89 million shares on SPY. While this is a decent number, it is a little misleading since we had monthly options expiration to end the week. This will always produce a higher volume number. The late day selling after 3:00 eastern time also produced a nice little pop in volume. We want to see this continue going into next week.

We will have another news driven week next week with some big names releasing earnings led by NFLX Tuesday afternoon. We also have a number of Fed speakers on tap with the Fed Chairman Monday morning starting things off. These are catalysts that could produce an active week for us.

In this week’s options recap video below we talk about this in more detail. We highlight another Overnight Pop trade that we closed out on Friday on SPY for a nice winner. We also take a look at a handful of markets setting up new trades for next week.

This includes SPY, QQQ, AAPL, C, ROKU, and WORK. Take a look at the video below and let me know if you have any questions that we can help with. Mike@netpicks.com

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