The stock market has been very stable over the past few months. The VIX (volatility index) is at a low right now. Today it was down 11% after the jobs number was in line creating a higher probability that interest rates will stay the same for a bit longer, possibly putting a hold on Fed rate hikes.
We are in uncharted waters so it is hard to predict what will happen next. There is no history to peg this situation on but my educated opinion is we will see some major volatility in the near future. September and October are historically some of the most volatile months for stocks. And this volatility could be to the downside. I hope your financial advisor has warned of you of this situation….
If you have been selling credit spreads in options you might want to consider adjusting your strategy. With lower option prices it might be time to start buying calls and puts (spreads, calendars, leaps, straddles, even straight up.) And if you do sell options make sure it’s a directional strategy and make sure you set a stop loss!. Iron Condors have been very successful over the past two months but I don’t have as much confidence in them at this point. That is all. Go Twins!
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