Wednesday, October 31, 2007

Unexpected 10% on QQQQ options in few hours

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As I mentioned yesterday I would expect the down move, but I would not a play short on this move, but rather use it as an opportunity to buy…

Today was nice day. After strong move down on all indexes, I saw the huge volume spikes that indicated that this correction down generated some panic among the traders and as soon as I saw the NASDAQ 100 started to recover I used this to buy options. Maybe not a lot, but by the end of the session I have pocketed 10% profit from the January QQQQ options.

The question is what's next?

By the end of the session I saw the similarly huge volume spikes to the price up-move. That mainly pushed me to close the QQQQ options position.

In spite today’s volatility I’m still in the bullish mid-term mood. However, my short-term outlook is not as bullish. I would still expect some further move up, but would consider staying in cash until I see clearer short term indicators.

At this moment my main short-term indicators on the NASDAQ 100 show that this index is overbought and for healthy up-move there is a need in a correction. On the other hand S&P 500 and DJI would show that there is still some room for up-move before we may see the that correction. I would expect more flat market for a few sessions with possible up-move. So let’s see what tomorrow bring us…

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