Quit Trading SPY Options! (Part 2)

Below are the charts of SPY & SPX from Tuesday, September 3 (they are set to the Mountain Time Zone). The Markets o Below are the charts of SPY & SPX from Tuesday, September 3 (they are set to the Mountain Time Zone). The Markets opened after a 3 day weekend at 7:30 AM Mountain Time. They basically sold off for 6 hours 17 minutes. At which time they made a sharp turn around climbing for the last 13 minutes of the day. SPY made a low of $549.51 before closing that day at $552.08. This Move from Low to High was 0.467% (less than half a percent). Meanwhile SPX made a low of $5504.33 before closing that day at $5528.93. This Move from Low to High was slightly less 0.446% (once again, just under half a percent). Now let’s look at screenshots of their Options for today. We’re going to focus on the Calls to the left. I want you to imagine that you bought the Low of the Day and then held out as long as you possibly could. We can’t really compare Apples to Apples. That’s because these are slightly different. But they’re close enough that we can hypothetically compare a Red Apple to a Green Apple (when it comes to eating Apples, I prefer Yellow Apples). Let’s look at the SPY $547 Call. It made a low of $3.06. The Last Trade was $5.32. If a trader Bought the Low and Sold the Last they made 73.8% in less than 15 minutes. Wonderful!!! Now let’s look at the SPY $548 Call. It made a low of $1.84. The Last Trade was $4.29. If a trader Bought the Low and Sold the Last they more than doubled their money in less than 15 minutes. Their move was 233%. That’s better than Wonderful!!! Finally, let’s look at the SPY $549 Call. It made a low of $1.00. The Last Trade was $3.15. If a trader Bought the Low and Sold the Last they more than tripled in less than 15 minutes. That’s the “best” Wonderful of the bunch!!! Now let’s look at some SPX options. But instead of trying to find a strike price to line up with the SPY strike prices, let’s look for trades with Lows taking place near $3.06, $1.84 & $1.00. In our hypothetical trading, we’re imagining buying our options at the Low of the Day. For SPY options also imagined Selling our options at the Last Trade of the Day. This is kind of imagining perfection. But in our hypothetical trading, using SPX Options, we’re not going to hypothetically Sell them as the Last (which would give us the best results possible), instead were going to take them all the way through the End of the Day. We can do so because SPX Options Cash Settle at Expiration. They do so for their Intrinsic Value. When using SPX Options, we don’t have to look at the Last Trade. We don’t have to because they Cash Settle. Instead of looking at the Last, which ended up being higher and would give us even better results, we choose to Not Sell to Close. Having said all that, we’ll start with the SPX $5510 Call. It made a low of $3.20. It Cash Settled for $18.93. That’s just under a sixfold move. The profit would be 491%. That’s an even better still Wonderful. Now let’s look at the SPX $5515 Call. It made a low of $1.80. That’s just a little less than the SPY $548 Call. This Option Cash Settled for $13.93. That’s more than a sevenfold move. The profit would be 673%. That’s an even better still better still Wonderful! Finally, let’s look at the SPX $5520 Call. It made a low of $1.00. That’s the exact same price as the SPY $549 Call. As such, this is probably the closest Apple to Apple comparison. If a trader bought both of these at their Low, they would have invested the same $100 per contract in each. I would like the SPX $5520 Call to make massively more money than the SPY $459 Call. It did in fact make more. But only an extra 78% more. But maybe the best part is that the SPX Trades would not have been Day-Trades. If a trader were able to buy the SPY Trades at the Low and then sell them at the end of the day, each of them would have been a Day-Trade! Remember buying an SPX option and holding it through the expiration at the end of the day does not count as a Day-Trade. As such, traders with smaller accounts can trade more often and make more money and not break any rules. Thanks and Good Trading, Chris --------------------------------------------------------------- See Related Articles on [TradewinsDaily.com]( [Quit Trading SPY Options! (Part 2)]( [Spotting A Bargain Option Trade]( [Chart of the Day: Newmont (NEM)]( [How To Act On Yesterday’s Drop]( [Rate Cut Hopes Lift Stocks Like This]( --------------------------------------------------------------- [TradeWins Logo]( © 2024 Tradewins Publishing. All rights reserved. | [Privacy Policy]( | [Terms and Conditions]( | [Contact Us]( Auto-trading, or any broker or advisor-directed type of trading, is not supported or endorsed by TradeWins. For additional information on auto-trading, you may visit the SEC's website: All About Auto-Trading, TradeWins does not recommend or refer subscribers to broker-dealers. You should perform your own due diligence with respect to satisfactory broker-dealers and whether to open a brokerage account. You should always consult with your own professional advisers regarding equities and options on equities trading. 1. The information provided by the newsletters, trading, training and educational products related to various markets (collectively referred to as the "Services") is not customized or personalized to any particular risk profile or tolerance. Nor is the information published by TradeWins Publishing ("TradeWins") a customized or personalized recommendation to buy, sell, hold, or invest in particular financial products. The Services are intended to supplement your own research and analysis. 2. TradeWins' Services are not a solicitation or offer to buy or sell any financial products, and the Services are not intended to provide money management advice or services. 3. Past performance is not necessarily indicative of future results. Trading and investing involve substantial risk. Trading on margin carries a high level of risk, and may not be suitable for all investors. Other than the refund policy detailed elsewhere, TradeWins does not make any guarantee or other promise as to any results that may be obtained from using the Services. No person subscribing for the Services ("Subscriber") should make any investment decision without first consulting his or her own personal financial adviser, broker or consultant. TradeWins disclaims any and all liability in the event anything contained in the Services proves to be inaccurate, incomplete or unreliable, or results in any investment or other loss by a Subscriber. 4. You should trade or invest only "risk capital" money you can afford to lose. Trading stocks and stock options involves high risk and you can lose the entire principal amount invested or more. 5. All investments carry risk and all trading decisions made by a person remain the responsibility of that person. There is no guarantee that systems, indicators, or trading signals will result in profits or that they will not produce losses. Subscribers should fully understand all risks associated with any kind of trading or investing before engaging in such activities. 6. Some profit examples are based on hypothetical or simulated trading. This means the trades are not actual trades and instead are hypothetical trades based on real market prices at the time the recommendation is disseminated. No actual money is invested, nor are any trades executed. Hypothetical or simulated performance is not necessarily indicative of future results. Hypothetical performance results have many inherent limitations, some of which are described below. Also, the hypothetical results do not include the costs of subscriptions, commissions, or other fees. Because the trades underlying these examples have not actually been executed, the results may understate or overstate the impact of certain market factors, such as lack of liquidity. Simulated trading services in general are also designed with the benefit of hindsight, which may not be relevant to actual trading. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk of actual trading. TradeWins makes no representations or warranties that any account will or is likely to achieve profits similar to those shown. 7. No representation is being made that you will achieve profits or the same results as any person providing testimonial. No representation is being made that any person providing a testimonial is likely to continue to experience profitable trading after the date on which the testimonial was provided, and in fact the person providing the testimonial may have experienced losses. 8. The author experiences are not typical. The author is an experienced investor and your results will vary depending on risk tolerance, amount of risk capital utilized, size of trading position and other factors. Certain Subscribers may modify the author methods, or modify or ignore the rules or risk parameters, and any such actions are taken entirely at the Subscriber's own election and for the Subscriber's own risk. If you wish to unsubscribe from our newsletter, click [here]( TradeWins Publishing Corp.528 North Country Rd., St. James, NY 11780