Looking at the NASDAQ, we had a fairly negative session during the day on Monday. However, there is an uptrend line that we are approaching. This trend line will essentially determine the overall trend of the market in our opinion. Because of this, we look to where the market coincides with that trend line and we decide that is our "buy calls or buy puts" line. As long as we are above 4400, we favor buying calls on signs of support. If we go below there, we feel that the trend is starting to break down, and that puts should be bought.
The DAX fell again during the session on Monday, and now looks like it’s basically broken. With that, we are buyers of puts as long as we stay below the €11,200 level, but we do recognize that there could be a bit of volatility just below as there is a significant amount of clustering near the €10,600 level. Ultimately though, we think that this market is starting to break down a bit.
Finally, looking at the GBP/USD pair, it appears as long as we can stay above the 1.52 level, the market will continue to find buyers to purchase calls. We will follow that formula, and simply buy calls every time this market dips. As long as we stay above 1.52, we have no interest whatsoever in buying puts at this point in time, and do recognize that even if we break down below there, there is a significant amount of support at 1.51 as well.
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