The bulls carried their momentum into Friday’s close and we have setup the possibility of a bull thrust to start another leg up. This week we will either continue that momentum or not. Duh.
If we are in another leg up the bulls must close the week green imho. A failure on the week means we will have to retest lows and most likely go lower. A green week greatly increases the odds of another leg but does not guarantee it.
Running through the numbers from a possible pivot low with a week that is up over 4% on the Russell 2000 we have about a 66% chance of making it up at some point during the week to 50% of range of last week’s bar. 66% is about my threshold for me to make a trade. (if we thrust up like March 9th,2009 we will put in about a 75% range bar to last week).
For IWM the 50% number would put us at $64.9. The IWM July 64 calls closed on Friday at 0.49. If we do a full thrust we should closes IWM on Friday around 66.50. That would put the 64 calls between 0.90 and 2.50 at the close.
Normally I don’t buy out of money options, in fact normally I don’t buy options at all, but this week we are coming into OPEX with a technical possibility of a major thrust. On Monday’s open I might just risk a little on a lottery ticket and buy some IWM options if I can fill at a reasonable price.