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With the return of the S & P 500 in correcting territory on Tuesday, a trader said that this could be a sign of trouble ahead for the market.
Second, the long-term moving average of the index. He notes that the S & P 500 is trading 4% below its 200-day moving average, proving that the trend is actually broken.
Finally, Gordon points out that the 2650 level is the new resistance, as the S & P has in fact traced half of its losses, which he believes could result in a profit taking or a reduction in cash inflows. on the market.
As a result, Gordon wishes to purchase March's monthly strike options of 255 strike and sell the March 250 put options on a SPY strike, the S & P 500 Equity Tracking ETF, at a price of $ 96 per month. option spread. If SPY were to close below $ 250 on March 15 expiration, Gordon could do just over $ 400 on the trade. If SPY were to close above $ 255, Gordon would lose the $ 96 that he had paid to complete the transaction.
So far this year, the S & P 500 index has risen by almost 5%.
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