LM Live! Report for Tuesday, October 27 The Dow Jones Industrial Average (.DJI) and the S&P 500 (.INX) were up and down for most of the day before closing mixed. The Dow was disproportionately influenced by good news on some of its components including IBM's announced share-buyback program. The index is more sensitive to changes in one or two stocks than the broader market indexes like the S&P 500.
The downturn today was largely blamed on missed consumer confidence numbers. The trend in those numbers is flat, which is a concern. The correction we are experiencing now may be extended if consumers don't accelerate spending into the holiday season.
Traders may want to apply more aggressive risk coverage at this point. In the video we discussed both protective puts as well as covered calls as two options strategies that can be used during these kinds of market adjustments.
Covered calls are a favorite strategy of ours but best results will occur when they are traded consistently rather than "timed" to market downturns. You can learn more about executing this strategy through the links below.
- Covered Calls the EZ Way
- Trading Covered Calls on Individual Stocks and Funds
- Covered Calls for Advanced Option Traders
Preparing for Tuesday Keep your eyes on the earnings announcements for the following companies: - General Dynamics (GD) - International Paper (IP) - Express Scripts Inc. (ESRX)
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