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This is one of our best seasonal trades, but it doesn’t occur every year. Simply stated, if there is a selloff in the broad market of at least 3.2% at any time during October, then the end of the month presents a strong buying opportunity: Buy on October 27th (if that’s a weekend, as it is this year, then buy on the preceding Friday – which would be today, October 25th). Sell on Nov 2nd (if that’s a weekend, as it is this year, then sell at the close on the following Monday – which would be November 4th this year)...
The market has stalled out. For several days (and today is included as well), it has tried to forge through 5860 but has been unable to do so. There was a minor pullback this week, to 5760, but so far it has not been much of a problem except for the deterioration it caused in some of the market internals (more about that later). The support zone of 5670-5770 remains intact, and this week's pullback penetrated just the top of that zone, and then the market bounced higher.
The VX futures options are set to begin trading this coming Monday, October 14th. They will be options only on the $VIX monthly futures, even though there will be daily and weekly expirations. The base symbol for these options will be UX (the futures themselves trade with the base symbol VX). Since there are daily options, the symbol will also contain the letters “A, B, C, D, or E” for the days of the week: Monday, Tuesday, etc. The symbol will also contain a number indicating the week of the month, 1...5.
The “election bump” is the term that I have given to the distortion in the term structure of the $VIX futures prices. Specifically the October $VIX futures continue to trade above the prices of the Nov and Dec futures. The following article adds some insight to this condition.
Join Larry McMillan as he discusses the current state of the stock market on September 23, 2024.
This title “Sell at September expiration” refers to the older days, when options only expired once per month – on the third Friday. Now, options expire every day, but the seasonal trading system is to short the market (or buy puts) at the close of trading today – September 20th, the third Friday – and cover a week later. That would mean exiting the position at the close of trading on September 27th this year.
Lawrence G. McMillan was recently featured on Chuck Jaffe's Money Life podcast where he discussed the current market environment. The interview includes Larry's thoughts on the recent market blip and where the market goes from here. Listen below.
