The Volatility Is Rising

For option traders and traders over all, volatility is always welcomed. It gives us a chance to play the up and down moves. And lately, the market volatility has been rising. Today's earlier sell-off has reversed completely. The only question is will these gains hold into the close? And will they hold through tomorrow's trading?

This morning, I closed out the position in ATI for a good gain. With ATI trading at $106.55, I sold the July 125 puts for $18.30 ($1,830). This traded resulted in a gain of 2.50 points or $250 per contract. This type of profit is right in my zone. Like yesterday's trade in FWLT, I could have held somewhat longer and made better gains. However, it is unclear if the Bull run is nearing an end and a bearish cycle may be starting. So, it is best to take targeted gains when they come. There is too much up and down price reaction to sit around and wait. Gains could easily be cut in half or erased on a quick rebound or sell-off. I am happy with the way I am trading this market. I am making steady profits. That is what matters.

I have entered a longer term trade. At least that is my objective. I have purchased the July 145 call option for Intercontinental Exchange Inc. (ICE). I have traded options on this stock before. ICE is about $10 away from its all time high of $167 per share. ICE was trading at $157.10 when the trade was executed for $15.30 ($1,530) per contract. I think that ICE has a good chance of challenging its high and quite possibly breaking through. I had mentioned this stock a while back as an upside play after it had made a decent bottom. I think this stock could get to $180 in a strong upward thrust. It has zig-zagged its way higher by about $25 over the last month or so. I am willing to risk 3-4 points on this trade per option. That is about twice my normal risk parameter. The preliminary upside target is a retest of $167. If this happens I will make further allowances for capturing more upside. I will leave a specific upside target open for now. I have about a month until this option would expire. If the market has a strong downside move, I will sell out this position.