Options: Insights from experienced investors
hey all. I'm going to provide a small write up because I've been drinking too many celebratory beers. (Industrial Arts - Wrench)
TRADING SPY is essentially trading the market as a whole. But there are some interesting things to note:
1.) During volatile periods (when 20-day volatility exceeds 20%), traditional fundamental indicators significantly underperform sentiment-based signals.
The data shows market psychology dominates during volatility, not underlying fundamentals.
Guiding your decisions based purely on fundies is not going to work out in a volatile market.
2.) SPY is the MOST liquid ETF on the planet.
Use this to your advantage. DEEP OTM options positions can be dirt cheap - and a single winning play can have huge gains. Don't be afraid to go deep.
3.) SPY represents the market as a snapshot of our current world. Tech sector currently makes up over 30% of the SPY ETF. If global disruption of advanced circuitry makes the news - how will SPY react?
4.) US of fucking A (my home), for better or worse, is our bellwether. The decisions made in the oval office will have an effect on the market ALWAYS. Use this, plus the notes above to maybe make future decisions.
Understand how the Fed works, what communications they make to the public that may sway sentiment.
5.) I am a degenerate gambler. Do not take my advice ever.
Signed sincerely and with much love,
Warlock
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