Here’s a link to a great idea from the latest issue of Futures magazine (www.futuresmag.com). Regular readers know I cull some nice nuggets out of these pages (subscriptions are FREE) and this month features an article by Susan Steward explaining the SPX/OEX 1-5 option setup. Playing the SPX/OEX spreads is typically a low risk endeavor but this setup has a number of attractive features not viable in other simple spreads. A thinking trader could easily imagine a similar strategy using SPY/DIA , SPY/IWM or DIA/IWM option spreads.
And now for a quick reality check:
Bernanke casually mentioned today in his twice a year report to Congress that the central bank was prepared to provide additional stimulus if the economic lull persists. Those remarks caused an apparent bullish ripple in the markets and a whopper jump in GLD and GDX. Above is the Fed’s buying schedule over the next month…a total of $14 billion and clearly much subdued from last month’s $70 billion purchase. Ben may have to raise the mark soon as the financials do not look bullish and may get really bearish once earnings are revealed….a sector to avoid IMHO.