The Volatility Trader
105 W. Monument Street
Baltimore, MD 21201
Monday, August 7, 2006
Email – #168
Action To Take:
There are no new recommendations for this week.
The geopolitical, economic and political pressures that have been causing the huge swings we have seen in the markets for the past few months are still with us. Normally (if you can use that word when talking about the stock market), we have some type of consolidation after a big move up or down. The consolidation takes the form of a leveling-off in prices, and it is essential for straddles and strangles to work.
Virtually every chart I looked at this weekend is either going straight up or straight down, with no consolidation in sight.
We have had eight huge up-and-down moves in the past six months, and no consolidation. This environment is just too risky to try to play short-term options. When you consider Iran’s promise to interrupt the oil supply if the UN follows through with its sanctions, we could be in for another crazy downward move as crude prices approach $100 per barrel. They are through $75 this morning.
I believe that if pushed, Iran will turn off its oil. Crude will go to $100 per barrel, and our markets will go nuts. Let’s stay on the sidelines for a little longer and give the world a chance to cool off.
Good Trading,
Steve
READ BEFORE INVESTING – Reminders for Every Trade:
- Don’t cherry pick the list. Do each trade as listed.
- Do equal dollar amounts in each option.
- Follow the trailing stops to the letter. If the bid on any option drops to your stop loss price, sell at the market.
- Stay on top of the emails and follow the instructions to the letter.
- The prices for each option were checked with a broker before I sent them. Use limit orders for all of your buys. If you can’t get them at the recommended price, don’t buy them. I will adjust the buy price as necessary or cancel the recommendation.
- You will be notified by email when to sell.
If you have any questions, feel free to call one of our VIP Trading Services representatives at 888.570.9830 (toll-free) or e-mail: viptrader@oxfordclub.com, or contact Pillar One Advisors Ron McCoy, Gunn Allen at 800.720.6576 or Neil Fern, RMB Group at 800.831.3114.
