July is setting up to be an interesting month because so many stocks I'm watching are so overbought from the March lows, they are possibly setting up nicely for a July swoon, to end up running in Aug.
WATCH ARO. What I want to see is it run up into early July to over $37. If so, and I think it does, then it's a great setup for a put play. But not yet. Timing is going to be critical on this.
The real problem trading options right now is a double whammy - the $VIX is falling which brings down the volitility premium in the calls. It's been the high $VIX that's made most of these damn options so expensive and has made so many trades that are great plays not worth doing because you need to big of moves to make any money. But if you're long them too long, and the VIX keeps falling, you get 'decayed'. The volitility part of the time value on the calls or puts falls if the stock doesn't move while you hold it.
But lower VIX is good because it sets these stocks up to trade more consistent as they are supposed to and as the seaonality suggests, unlike what happened in the Fall. Although I will say that eventhough the market got destroyed, most of the direction was still seasonal in the direction.
You know, what I've noticed is that everyone has completely forgotten about the 'January effect'. When Jan is bad, that typically sets up the market overall to end the year bad. And let's face it, this Jan was pretty damn bad.
Hmmmm....
AI
