What Happened: If you woke up on Friday horrified, you're not alone! With the S&P 500, Dow, and Nasdaq all down over 2%, I also had to cross a few percentage points off my Thanksgiving list of things I was thankful for.
If you can still afford beer, remember to pour one out for our boys in the energy sector, as Crude Oil dropped a whopping 13% in the worst single trading day in months.
Why Did it Happen: Big surprise here! It's covid related. There's a new variant in town named "Omicron," which I had previously thought was a villain from Transformers. Anyway, fresh fears of new government shutdowns and travel restrictions had traders mashing "sell" like it was an obnoxious button on Jim Cramer's soundboard.
What To Do About It: We sell fear here! All this fresh panic has the premium from selling puts looking J U I C Y.
My trade of choice? Sell puts on the SPY anywhere below 453. With technical support at 453, and the 50-day moving average remaining intact, that should be enough to slow the drop long enough for a little time to expire, handing you that sweet inflated premium in the process.
Pro Tip! I'd stick to shorter durations here, son. Weekly options only. This will protect you from a worst-case scenario. If the market were to continue to move lower, you don't want to give it months to drag your account down with it.
