VIX6 – SPX Trade #3

Market Context
Good day Insiders,

Well, yet again we seem to have the sentiment that everything is peachy and this market can only go up. Now, I am not saying that this market can’t keep going higher as evidence shows we are a good few hundred SPX points from the all-time highs. Please do not get me wrong, I am bullish on the market for the year however there is no way that we are going to do nothing but go up like it’s Obama in office in 2016. This administration and government officials are just not that kosher. Before getting too political and turning this update into a rant, we are going to get prepared for expected volatility heading into next week. Keep an eye on where we close today. If we elect a new weekly high on the close (closing above 2675) I may start to get slightly less bearish in the short term.

The Trade
We are seeing resistance at 2710 in the SPX and so we are going to sell the 2715-2725 call spread and let time decay (theta) work in our favour.

Risk & Reward
Using $8,200 in margin, we have risk above 2716. Given that these trades are speculative, allocating 3-5% of a portfolio is safe.