Options Jive

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Timing a Sale in Stocks

Options Jive

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

Recently, the stock market has been experiencing its highest prices ever. But what has happened in the past after the market made new highs?

According to our study on the S&P 500, the stock market on the following day has a higher chance of bullishness. The following week witnessed a similar result, but to a much lesser extent. The stock market on the month following new highs had a significantly lower probability to be bullish and much lower daily return.

The fact that stocks continued the bullish run in the short term renders short-term contrarian trades with no edge, while bearish trades utilizing options get larger benefits in shorting stocks at new highs due to their higher POP and longer timeframe.

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