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Trade Of The Week: Long Call or Long Put on XJO based on the market open

December 9, 2020

Trade Of The Week: Long Call or Long Put on XJO based on the market open

The S&P/ASX 200 Index has been trading around the 6500-6700 range since the 17th of November. Today the market has broken resistance and closed above 6700, but we expect it will be experiencing resistance at the 6750 level.

The S&P/ASX 200 Index has been trading around the 6500-6700 range since the 17th of November. Today the market has broken resistance and closed above 6700, but we expect it will be experiencing resistance at the 6750 level.

So we once again have an opportunity for the market to rise, fall, or trade sideways.

Source: Implied Volatility

If the market opens above the 6750 level we should expect it to trade higher over the short term and break out. If the market opens below the 6700 support level we should expect it to fall towards 6500 over the short term. If it opens between the 6700-6750 we should expect it to trade sideways over the short term. 

To profit from a rising market, we can enter into a long call position.

 

To profit from a falling market we can enter into a long put position.

 

Entering neutral positions while TMC’s are unavailable will be difficult so we will not suggest a neutral trade in the current environment.

 

If you would like some more information on options trading strategies, call 1300 805 795.

 

You can also follow this link for a detailed tour of the Implied Volatility platform.  

To try trading for yourself using the most powerful Options Trading technology in Australia, click here for a trial for our Implied Volatility platform

 

We wish you good luck with your trading, and as always if you have any questions, please feel free to contact our trading desk on (03) 8080 5795. Please note, we provide General Advice only. 

Past performance is not a reliable indicator of future performance. The opinions expressed in this article are our personal views. 

Trading options is not suitable for everyone. There is a risk that you can lose more than the value of a trade or its underlying assets. You should only trade if you are confident that you fully understand what you are doing. If you are thinking about acquiring a financial product, you should consult our Financial Services Guide (FSG) at www.reachmarkets.com.au first. 

 


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