etfmsolutions: SPY Straddles as Weakness Creeps...08.01.16

Monday, August 1, 2016

SPY Straddles as Weakness Creeps...08.01.16

First trading down of the month and it wasn't bullish. Goldman is bearish for the next quarter, echoing Gundlach's post over the weekend (which has been widely circulated as might be expected)
But...before we throw in the towel...this summer has been nothing but contradictions and the only thing we can be assured of is a break...probably sustained...that will provide new trading opportunities (how that's for being non-committal?) .
A delta neutral strategy is the safest way to approach current narrow band conditions but here are two SPY straddle setups (as examples) that also offer risk/reward advantages. The shorter term (8/12) expiration trade looks like the better bet for now.
Note that the options are different strikes to reflect call/put cost parity.
Following today's swoon in crude (back to a 3 month low) and Treasures (back down to mid term support) the odds increase each day for a big move.

Same option strikes, different expiration.

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