Live: Tuesday, Sept. 4, 2018

3:20 p.m. New York time

I had no need to trade today. As we near the closing bell, SPY is trading within Friday’s range.

Over the summer my trading dropped off, primarily because of uncertainty over where we stood within the new bear market. I’m feeling comfortable enough with our new era to attempt a greater volume of trading.

My plan is this: I’m looking for stock options, as opposed to ETF options, because stock options tend to have higher implied volatility, which increases my profits.

Because of the directional uncertainties at this point in the Elliott wave progression, I shall focus on short iron condors, which limit losses both when the underlying rises past a point and when it falls past a point.

I’ll be looking for stocks that have high relative implied volatility and that are rising. To measure relative IV, I shall use the IV Rank metric developed by Tom Sosnoff‘s team at TastyTrade.

Tom had the vision of democratizing access to professional-grade options trading tools and oversaw the development of ThinkOrSwim, the best options platform there is and the platform that I use for my trading. He eventually sold ThinkOrSwim to TDAmeritrade, which manages it to this day.

I urge anyone who hasn’t checked out his current venture, the options education platform TastyTrade, to do so, and to get on the email lists immediately. His team, personified by “Dr. Data’, provides reams of useful information about individual stocks and funds. The IV Rank metric I’ll be using in my trading is part of that data.

All absolutely free. Great tools for options traders. (This is not an advertisement, by the way, but a heartfelt homage to a vision and tools that have had a huge impact on my trading.)

He also runs the brokerage TastyWorks, which I haven’t check out yet, but I plan to, quite soon.

7:20 a.m. New York time

With Labor Day behind us, the markets set summer’s quirkiness aside and begins the serious business of August.

September, it is said, typically is a down month. That would certain match where the S&P 500 — in the form of its exchange-traded fund SPY — has positioned itself. I posted a longer-term chart on Aug. 27, suggesting in my discussion that it showed a peak was near, to be followed by a substantial decline.

Today’s shorter-term chart, covering 15 days with 20-minute bars, confirms that that finding.


My Elliott wave analysis suggests that it is an X wave of the Minor degree {+2}, combing two corrective patterns. X waves tend to be zig-zags, and I would anticipate that it would reach completion above the start of prior corrective pattern in the series, in this case a zig-zag that began Feb. 9 at $252.92, which is 15% below the Aug. 29 end of that pattern at $291.74.

By Tim Bovee, Portland, Oregon, Sept. 4, 2018

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.


All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

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