ETF Covered Calls 05-07-2010

What an interesting week with the market.  I was actually in meetings ALL day with little access to a computer the past two days so I wasn’t aware of the market collapsing until I got to the hotel to watch some news.  I’m not surprised at what happened as the ETF-Cashinator has been hinting that something like this was coming and I kept warning about May the past few weeks here, here, and here.   Despite the unpopularity of this statement it still rings true:  These markets are acting in an abnormal manner, there is far too much xolatility in them and nothing has changed since this financial crisis started.   Sure, you can make money here and there with some strategic trades but the bottom can fall out.   I am SO glad I’ve been sitting in cash as OIH dropped from $135 to $109, quite a hair cut for those trading this ETF.    Gold is booming just like the ETF-Cashinator stated the last couple of weeks.

The ETF-Cashinator is showing a large amount of xolatility especially considering we’re 14 days away from May expiry.   I won’t venture a guess on whether the market will be up or down on Monday but the options volume seems to indicate “bargain” hunters will buy on Monday.   There is a great deal of option volume to the positive side versus put volume but I wouldn’t bank on that theory!   I was tempted to buy OIH below $110 but I promised myself I wouldn’t trade until AFTER May and I’m going to try as hard as I can to stick to that commitment no matter how juicy some opportunities seem.

Note:  everyone’s talking about the VIX, wow talk about a useless post-mortem tool.  It’s like saying, “wow the thermometer is showing it’s hot outside!”  Well duh!  The ETF-Cashinator beats the VIX hands down!

Here’s the google link.

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