Quad Witching Friday – Options Expire Amid 4 Fed Speeches

As I told you on Wednedsday morning, we were getting way too overbought to keep going much higher.  This stuff isn't complicated folks, it's just physics.  When the Market did pop after the Fed at 2:30 on Wednesday, I said to our Members in Chat:

Gotta love IWM at $107 (RUT 1,070) for a short.  Actually, TZA is more fun with the Oct $22/25 bull call spread at 0.96 so 20 of them in the STP to start and happy to DD if they get cheaper.  

That was, so far, the bottom of TZA and that thing is going to fly if the Russell falls back below 1,070, so it's a fantastic hedge that pays $6,000 back on $1,920 if TZA gets back to that $25 line into October expirations.  We also took the opportunity (4 minutes later) to sell FAS calls into the spike in XLF, with me saying to our Members:

FAS/STP – Let's sell 5 Oct $80 calls for $1.55 ($775) and we'll buy more longs if they hold $75 into Friday (also riding out the short $70 call, now $7)

Already yesterday, those FAS short calls closed at $1.30, which is up a quick $75 (10%) in just one day.  These are action/reaction plays and we had a discussion in Chat, in fact, about how understanding implied volatility and the way it changes and affects option pricing helps you gain the confidence to make these day trades.  Also, by the way, I'm not really an "I told you so" kind of guy but, if I don't point out that I told you so – then how will you know the next time we see a similar thing that maybe I know what I'm talking about?  

Oh boy did I tell you so – over and over again –…

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