SPX Potential Bat Pattern - Opening/Closing Call
SPX This idea will probably not play out, but at the very least something to consider for the 06/30/2017 trading session.A potential bat pattern forming. Not much of the pattern has formed, but point B in the structure (about 0.50XA) is almost perfectly placed. I have two propositions to make for the morning opening call and if it succeeds, a potential shorting opportunity for the aftermath.
Long Opportunity:
{
Proposition 1: We gap down to around point C ~ 2412.56 (near support area from point A ~ 2405.70) for about 10 minutes, reverse, and then continue toward point D ~ 2438.42 for most of the trading day. You could try going long by grabbing some 2420 calls in this scenario, risking only a few points.
---OR---
Proposition 2: We don't gap down in the morning. Instead, we continue the trend toward point C ~ 2412.56 (near support area from point A ~ 2405.70) for the first hour of the trading session, reverse, and then continue toward point D ~ 2438.42 for the remainder of the trading day. As before, you could try going long by grabbing some 2420 calls in this scenario, risking only a few points.
}
Short Opportunity: If propositions 1 or 2 hold true, then the probability increases that you'll have another opportunity to make money by shorting the market at point D. The bat pattern completes in the Potential Reversal Zone (PRZ) within 2437.77-2438.42 (this could be roughly 3PM-3:30PM EST). There is a lot of overhead resistance there. So this area makes a lot of sense for a potentially good short. Close the 2420 calls for a profit if you haven't already done so in propositions 1 or 2 and then try grabbing some 2435 puts. If there is some time left near the end of the trading day, the last 30 minutes of the session would allow you to grab those puts for dirt cheap. It could be that in the last 30 minutes of the session, a quick 5-pt sell off occurs to bring
SPX below 2435 since traders may want to close their positions and avoid overnight/weekend/holiday risk.
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