Warrior Trading Blog

$SPY Support Trade Nets Another 30% Win For Options Traders

$SPY Support Trade Gives Options and Swing Traders a Quick 30%

After a fairly slow start to the year, it is sometimes nice to go back to the basics. Doing a hard reset on your trading sometimes requires finding a simple opportunity. Being simple doesn’t mean that there isn’t good opportunity in the trade. An example of this was on the SPY pull back opporutnity. The $SPY, being the broadest market ETF we regularly trade, gives us plenty of swing trade opportunities. The $SPY loves to test and recover from moves to support (see chart below).

 

The $SPY, going back to December following the Trump rally has been trrading sideways. A nice boost up last week made us new highs which prompted a quick and sharp sell off to support. The beautfiul thing about using the 20/50/200 exponential moving averages is, they are predictably awesome short term areas of support for the $SPY. In the video recap below, I discuss the reason for using those EMAs in particular. The any time the $SPY tests these critical areas on a chart, whether up or down, it creates a great $SPY support trade or a $SPY resistance trade opportunity. As usual, I like to use options on these trades to minize capital outlay and compartmentalize risk on the higher priced names.

 

Check out the $SPY Support Trade Video Recap