Good afternoon, this is James Cordier of OptionSellers.com with a market update for January 15, 2016. Michael Gross and I have written a few books, actually three different editions of the same book, The Complete Guide to Option Selling. On the very front of the book it talks about possible stellar returns in both Bull and Bear Markets. Well, we’ve done, in my opinion, quite well over the last several years where the stock market has been trading higher. I believe we were up six or seven years in a row, with the exception of 2015, where I think, the stock market was basically flat, possibly down 1%.

Going into 2016, we’re getting continuous calls from some of the largest investment banks in the world, saying that 2016 could be quite different from the previous several years. RBS, this past week, talked about a cataclysmic year in 2016, to actually say, “Get out of everything.” Have you ever noticed when investment banks and large stock brokerages are very slow to talk about the market possibly going into a down turn, they normally use a terminology like, “We’re going to have a great deal of movement, both up and down, lots of volatility.” But they never say the market’s going to fall. For the first time in several years, we’re getting large investment banks saying just that.

On the front cover of our book, possible stellar returns on Bull and Bear markets, it looks like in 2016, we’re going to implanting strategy for a Bear market. We do have the ability to go both ways – we also can be neutral. But, I think 2016 does look like a possible lower market as far equities go. Quite often you talk about and hear people discuss, “As January goes, so does the rest of the year.” I believe with two weeks into 2016, the U.S. stock market is down 8% already.

I know a lot of people listening to me right now, do have some stock holdings. I hope the market does rally. We’re going to possibly be positioning ourselves for a Bear market. However, what’s most interesting about selling options on commodities, it gives us the ability to diversify. The fact that we’ve got commodities trading at very low levels right now, does actually offer opportunity. Wrap your head around this: Commodities, some of the major commodities that have helped China grow over the last several years, and of course commodities that we use around the world, are sitting at twelve and thirteen year lows. What does that mean? A lot of these commodities are reaching levels that are required to pull them out of the ground or to produce them. That should hold many commodities from going too much lower.

On the other hand, we have a slowing economy, both in the Unites States, as well as other parts of the world. That should keep this market intact. Over the years, we would have people and investors talk to us, you know, “James what’s the next big move?” “What’s the next Bull market?” Or, if a market has rallied dramatically, “What’s a good market to shore?” This is interesting. In all the years I’ve been doing this, the most prominent way to make money selling options and commodities is to find commodities that are fairly valued.

If you have the ability to put short positions on a call, above a market, possible 50% to 60% north of where the commodity is trading, at the same time, selling options 40% below the current price, the ability to forecast and find fair value commodities is more valuable than finding the next commodity that is going to move 10% or 20% to the upside. The put is taking care of the call and the call is talking of the put while you wait several months for the market to stay inside that window. We feel that going forward, the landscape for commodities to stay almost in a neutral position for the next six to nine months is very high. That is the position we’re going to take on many commodities. I know a lot of our clients have witnessed that already and it looks as though 2016 will be ideal for that situation.

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