Take advantage of a New Channel (SPY)*

Volatilitiy is falling, but as long as the indexes remain in a flat zone, you can still take advantage of some neutral strategies, such as your Iron Condors, Calendars or Butterflies to name a few.

Consider the recent SPY breakout and the potential new range for it. It's not uncommon to have positive returns for the last quarter of the year (October to December). Although it's a bit early for the breakout to occur, if you look at the potential movement from the resistance near $112 to the upcoming resistance near $121, the 7 to 8 percent positive movement would be on track for an average "final quarter return" for the S&P 500.

SPY as of 9-24-2010 (click on browser's back arrow to return to blog)


*This posting is for educational purposes only and should be constructed in a paper money (fictitious) account. It is not intended as a solicitation or recommendation to buy, sell or hold any security. Past performance does not guarantee equivalent future results.