The First 15 Minutes Are the Wild Wild West

Okay so, the first 15 minutes: I call it the Wild Wild West, and I'm not being cute. The market's trying to figure out what it's doing.

Overnight orders are hitting, the news from the morning is getting priced, and price is going up, down, sideways, blah blah blah, before it picks a path.

A move that looks real at 9:33 reverses at 9:41, and that's not sometimes, that's all the time.

That alone should slow you down. But that's not the check.

The check is what the option costs you.

In the first five minutes of the day, options are spendy. Nobody tells new traders this. The same call you'd pay one price for at 10:15 costs you a lot more at 9:31, because the whole market is uncertain and that uncertainty gets priced into every contract. So you're paying top dollar to take the highest-risk trade of the day. It's both things at once.

Now think about the juice.

The juice is how far you're expecting price to move if you're right.

If you're playing for a 50 cent move, that's narrow, and if you're paying up for the option because it's early, there might not be any juice left in it for you even when the trade works.

You can be right on direction and still lose money on the trade. I see it every single week.

So before you buy anything, you ask two questions.

1)How much am I expecting this to move?

2)And what's it costing me to find out?

If the second number eats the first one, you pass. In the first 15 minutes, the second number eats the first one nearly every time, which is why I don't trade them.

Passing is fine.

There's another one tomorrow, and the day after that. I tell my Game Plan QQQ members we have a trade every day, and the market's the same for you whether you're in my room or not.

There's no prize for being in the first trade of the morning, and there's a real cost to it.

One more thing, because it'll happen at some point.

News will trump the charts.

If something drops out of Washington at 9:40, your setup doesn't matter, and that's one more reason to let the first 15 minutes belong to someone else.

Your homework for Monday.

Pull up the Qs at 9:31 and write down where price is. Do it again at 9:45. If you've got an options chain, check what the first call you'd have bought cost at both times too. Do that all week and you'll never look at the open the same way, and it costs you nothing but paying attention.

Rock On,

Voz

P.S. The whole point of that lesson is that your plan has to exist before the Wild West starts, not during it. That's what Game Plan QQQ is. Before 9:30 every morning you get an email with exactly what I'm trading and where, then you come into the room and watch it on the live chart with the rest of us. Mark's teaching the new members how to automate it next week, so this is the week to be in.