Options and Stock Market Technical Chart Analysis for August 20, 2009 by Idan Koren

Today we play the calendar game. We start off with a weekly chart of the ES (SPY futures) dating back a few years and see what has been happening in the markets ever since. We slowly zoom into the action and try to understand where we are at within the bearish patterns that have been developing over the last 6 months. Today we notice that the 3 last days of the rally have been an ascending wedge formed by an options expiration lift, and if broken to the downside could be incredibly bearish into next week. We also notice that the last week has been basically consolidation for another potential move higher if 1008 on the S&P is broken. If that level is broken, we will shoot to the 1008 double top and probably break it and rally to at least 1020-1025 and as high as 1045. Since we've had 3 days of low volume rallies we believe that tomorrow could be a pull back, we played today by selling the upside 102 SPY august calls hoping for some premium, and buying september puts (even though some got stopped out earlier on).

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[Athenaikos]

Good work Idan. So, you think P2 max = 1045?

[u05ikoren]

My estimate at this point is at max 1045.. but we will have to see when we move along

[u05ikoren]

I have september puts and Sold a lot of the SPY 102 august calls, that's how i'm placed into tomorrow.. with that in mind.. i will take profits tomorrow on the september puts and hopefully let the august ones expire worthless for about 0.23 a contract

[u05ikoren]

These options are for a day trade, for a shoot down tomorrow.

[u05ikoren]

These options are for a day trade, for a shoot down tomorrow.

[patriotsundergod]

go for Oct dude

[Ultravis66]

November/December puts. Always give yourself a MINIMUM of 3 months time value, I even go out 6-7 months. The reason is because the farther out in time you go, the less your money gets eaten up by time value. The last month of options, the price of the options go down extremely fast. Look up logarithmic in google images and it will show u a plot of what is similar to options time value as you get close to zero (time).

[IsaacB5679]

I took your advice and sold SDS at the 880 level.... rebought SDS and DXD today.