RUT Options Trading

David, mentor at SJ Options, is talking about the economy and the RUT in the sample from our options mentoring program.

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RUT Options Trading By SJ Options

Video Transcript

...but we need to be ready when it does. I’m just looking at the chat here. The SMT is also at a 5-year high too and that that is correct. What is that? A 1470 I think, pretty crazy. Over the last week, since I’ve been with you, I think the Russell’s going up about 5 points from the mid-870’s to 880 and then the RVX has come down to mid-17 to the low 17’s. Historically, very low, very low.

In times like this in history, chartists will tell us that when the VIX or the RVX or any volatility calculation is as low as it is right now that when everybody is optimistic, then you should be heading for the door. But again we don’t know when that’s going to happen. We’ll look to the new events, it’s a double-edged sword and listening to all the, what I called noise and I’m kind of a noise junkie I’ll say. I’m the one that is listening to the news. I like to know what’s going on whether it’s company specific or what’s going on in Washington. I like to know what’s going on because I believe that that affects the short term nature of the trades that I’m in or the trades that I might want to put out.

But on the flipside of that, as also a long term investor, I try to cancel that noise out if I’m thinking about something other than options if I’m looking at a specific stock that I want to hold for the long term. Personally, that is how I like to do things and that I’ll take profits that I make short term on some option trades and plow that back into the market for a long term growth. Because I am kind of an optimist that hurt over the long term and that’s kind of how I play the market. But we are at a low volatility now so we have to be ready for increased volatility.

Let’s see, over the last week we had the jobless claims come out. They were a little bit higher number than expected and so that day, the market was flat on Thursday. And in Friday, US international trade, the import export number was a little bit worse than expected. That was Friday, I think also Wills Fargo reported their earnings and it was a little bit worse than expected and so that dragged down many of the bank stocks. There’s a lot of folks in, Bank of America stock for instance, and that—it has been on an uptrend recently and I think that pulled back a little bit at even the last week as well.