Trade Plan: Week of Feb. 29th

$ES Futures and Options:

If you read my wrap-up for last week, you know that I made a decent profit, but also that I was dissapointed in my performance. Due to this, I did not open a position on Friday, as I normally would sell options. So I am starting the week with no futures positions open.

We had a really nice move up last week and broke above an intermidiate top, and I will be positioning for a retest of last weeks high at some point during the week. Last weeks range was ~82 points(~4.4%) and the week before that ~68 points(3.7%). This is a new week and anything can happen, but it’s nice to keep these ranges in mind for context.

Friday, we had a nice pullback from an intermediate high (~1969) and closed at about 1941. That’s about a 1.4% pullback down to intraday support (see chart below, upper band of support). Below intraday support at around 1940, we have another intraday band of support at arout 1930. I will look to start the week by selling an ATM Mar4th weekly put option between 1940 and 1930. This will give me a nice margin of error as the premium sold should be a little less than 1%, giving me a breakeven at the end of the week of between 1910-1920. If the 1930 to 1940 bands of support do not hold, I expect the next level of support at around 1920, and below that the lower trendline which is currently near 1900. There is good support at 1900, but I am sure there are also a lot of stops just below 1900. Any strong move below 1920 I would expect to be gunning for stops below 1900. It’s important to keep in mind that it’s okay to be wrong, but it’s not okay to stay wrong, so I will need to re-evaluate my long bias if price moves much below 1920.

For any options sold, I will look to let them expire worthless or buy them back with more than a 50% return on premium sold. For options positions that go against me, they will be closed if the loss exceeds 100% of the premum sold.

Have a great week!

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