What Today’s Rally Tells Us—And How To Trade It

Markets bounced back after a rough week last week. The Dow had punched down towards the 100 day moving average but then used that as support for today's snap back up. Unlike the other indexes, the Dow is still off the top of its recent range and has the potential to keep climbing higher. This is an opportunity to grab a call option on a Dow ETF like UDOW between its current price and the top of the recent range.

An option is ideal in this type of situation as it has the potential to double in premium if the bounce back up continues and it hits the target of the op of the range. It also is a great strategy as it locks in the risk. No chance of a wild gap down that takes away a significant amount of your profits. With this type of strategy, you would have a set amount of risk that would only change to your benefit once your trade is placed.

Options are an incredible opportunity right now as volatility is lower than is has been for over a year and that is keeping options relatively cheap.

If you want to see other ways to exploit these unique conditions or get started with options, you should check out the training offer that Wendy Kirkland sent out earlier. It is a great eye opener to the most effective option strategies for specific markets and is simple and easy to understand. Registration is limited but you can still access it here 

 

 
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