I think the order of the day and more likely the month of January is to be very careful. I have had about 90% winners over the last 6 months in the options market by being a patient and waiting for set ups I liked. And in that vein right now I don’t see anything I like. My first inclination is to expect a lot of theta burn. By that I mean both call and put buyers get stuffed by a choppy market that erodes time values in options without much directional progress. Of course there are option strategies for that and I spoke to subscribers yesterday about AMD. In the attached chart I expect the purple area to be resistance and the blue area to be support.

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So far on Wednesday that was the case as we got into the support area on AMD and at least to some extent bounced out. I considered a credit spread, say long the 195 put and short the 205 put in a credit spread bringing in $2 when AMD was 206. However the problem with that for options expiring the 9th of January I was risking 8 to make 2. Now the probability was on my side because  anything above 203 is a profit, and at the time the stock was 206— so there is a cushion. But the risk was too great for the reward in my opinion, even if the probability was high. So far the market seems immune to almost any news that it would interpret as bearish. When that belief breaks it can shatter quickly and violently. So that is in my mind also when thinking about the credit spreads. Could lose the max on an overnight gap, and no way to mitigate it.  So bottom line, patience pays. There is nothing to do here. 

Thanks,

Joe