Why Being Patient During These Market Conditions Is So Important

Why Being Patient During These Market Conditions Is So Important

Posted On May 19, 2021 4:16 pm

Every Monday at 11:00 a.m. EST, professional trader Mike Honig and I run our one-hour Weekly Academy Call, where we discuss broad macro themes and answer questions on options strategies, and delve into specific positions. Recently, as you may imagine, there’s been a lot of discussion, as well as suggestions, on how to “repair” a position that’s turned against you.   

Speaking of which, as an Options360 Concierge Trading Service member, you gain full access to those invaluable Academy Calls! 

With my birthday being next week [Thursday, May, 27] and Memorial Day following, we’re lowering the barrier-to-entry by granting full access for just $9 — until then. I assure you this deal will never be repeated. Click here to claim this special offer!

On Monday’s call, I started with a broad take to “be careful” as the markets seemed to be moving under even less logic than prior months if that is possible.  However, my conclusion was drawn from us seeing a wicked big-cap tech growth rotation into cyclical value — both seemingly running out of steam.   The pockets of bubble, from SPACS to Crypto had also been deflated. 

By “being careful,” I made it clear that I wasn’t bearish.  Just be more discerning, and yes patience in choosing your trades. The S&P500’s (SPY) exactly where it was for five weeks; all the hoopla, crypto, politics, and earnings once again meant squat to index watchers.  Of course, there was plenty of turmoil under the hood as the aforementioned rotation took commodities and related stocks on a joy ride — all while the previous darlings such as Zoom (ZM), or Virgin Galactic (SPCE) crashed and burned by over 60%.

Now, it just seems that the people are counting their chips and waiting for a new catalyst to give the market a new narrative and direction. 

So, while the trade frequency has slowed down, I do feel a lot more in control, and running profits and losses (P/L) reflects this patient and defensive stance. 

For example, On Monday I issued an alert to Options360 members to establish a bullish diagonal spread in Microsoft (MSFT).  It wasn’t executed with our price limit.  On Tuesday, we re-entered the order, and once again it wasn’t executed with our price limit.  

Then this morning, with MSFT dropping to my targeted entry point with support at $240, the order was filled at our target price.  The chart looks weaker than it did on Monday. But, I was patient for a good setup and to make the trade at an attractive price. 

Will we need to turn defensive or simply cut and run? We shall see.  However, one thing that I know is that I won’t be turning tail and chasing the bear down to lower prices. 

As a reminder, do not miss out on the Special Offer into the Options360 Concierge Trading Service for the mere monthly price of $9! You’ll get full access to real-time alerts and texts, the website tracking performance, and 1,000’s of hours of high-profile trading webinars. But that’s not all, you’ll receive a Special Bonus Invitation into the Options Academy! Click here to lock in your exclusive $9 rate — before it’s gone!


About author

Steve Smith

Steve Smith have been involved in all facets of the investment industry in a variety of roles ranging from speculator, educator, manager and advisor. This has taken him from the trading floors of Chicago to hedge funds on Wall Street to the world online. From 1987 to 1996, he served as a market maker at the Chicago Board of Options Exchange (CBOE) and Chicago Board of Trade (CBOT). From 1997 to 2007, he was a Senior Columnist and Managing Editor for TheStreet.com, handling their Option Alert and Short Report newsletters. The Option Alert was awarded the MIN “best business newsletter” in 2006. From 2009 to 2013, Smith was a Senior Columnist and Managing Editor for Minyanville’s OptionSmith newsletter, as well as a Risk Manager Consultant for New Vernon Capital LLC. Smith acted as an advisor to build models and option strategies to reduce portfolio exposure and enhance returns for the four main funds. Since 2015, he has worked for Adam Mesh Trading Group. There, he has managed Options360 and Earning 360, been co-leader of Option Academy, and contributed to The Option Specialist website.