the market finally opened through SPX 3,000… which is a number we’ve been eyeballing for weeks.
The SPX broke through 3,000 and closed at 3,021.72, the highest level since March. Stocks like airlines and cruise ships opened the strongest.
AAL closed up 14.85% and CCL (Carnival) closed up 12.6% on reports that the economy is going to open strong.
KEEP IN MIND that the market almost never closes above a big number (like 3,000) the first time. The market slided back under 3,000 before the close. We should test the level more times in order to have a clear breakout and bullish bias.
We typically close above it after the 2nd or 3rd attempt depending on how much buying needs to be done. With $5 trillion on the sidelines… There is a lot of buying that needs to be done, which will cause a bubble up before the POP (bearish correction) in a few months.
How can we use this market analysis to take advantage using Options?
First of all we can use the SPY which is the SPX ETF. SPY is traded at 1/10 of the SPX value, 3,000 SPX value is 300 SPY. Options on this ETF are more cheap than Options on SPX!.
We are now on the 3,000 level and the bias is bullish… IF Trump doesn’t increase concern about a China War Tariff.
To take advantage of a bullish move for the next month, buying a CALL or a CALL spread on SPY 60/70 days expiration would be a good edge in my view.
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Marco Doni – ecs.OPTIONS expert and CNBC contributor
The articles are not intended to give any advice on how to invest money, they are just for educational purposes.