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Traders know September has a reputation as one of the toughest months for stocks. And with markets already showing cracks, the setup is starting to look familiar…
The S&P 500 gave back earlier gains Friday and turned red for the week — exactly the kind of pullback that often paves the way for stronger trades.
A Healthy Pullback, Not a Collapse
The index turning red for the week may feel like a warning sign heading into a new month on Monday, but it’s more of a reset. Markets have been walking on “thin ice” at recent highs, and a pullback offers the chance to build positions at stronger levels.
This type of weakness is expected in September and can help traders enter with better risk-to-reward setups.
Even during days of extreme selling — like the fifth-fastest crash in 100 years that we saw earlier this year — the tendency is for the market to snap back. Option pricing often reflects that expectation, with spreads becoming more expensive in the short term.
But pullbacks that shake out weak hands also tend to clear the way for steadier advances.
Positioning for the Next Move
The current dip is just a setup. Lower prices give traders more confidence in their entries compared to chasing highs, which has been tough lately. And with major catalysts like the Federal Reserve and presidential cycle seasonality still in play, a September retreat could be the base for the next leg higher.
When the market dipped sharply earlier this year, it set the stage for what became known as the Dream Portfolio — a portfolio of trades that Nate Tucci and I put together and shared with everyone on Opening Playbook.
It has so far produced outsized returns simply by betting the market wouldn’t fall much further. That same logic applies now…
Weakness paves the way for opportunity.
Lessons From the Dream Portfolio
During April’s market crash, the Dream Portfolio was built on the idea that when indexes fall 20%, odds favor stability or recovery within a year.
Trades across the S&P 500, General Electric (GE), gold, and Bitcoin proved it out, delivering returns from 42% to as high as 129%.
The key wasn’t timing the exact bottom — it was recognizing that extreme sell-offs create rare windows for defined-risk setups with oversized payoffs. That same framework could come into play again if September weakness deepens.
Instead of fearing pullbacks, traders can treat them as chances to load up on high-conviction positions that might pay for months ahead.
Order Flow:
This is for informational and educational purposes only. These are not official alerts issued by Lance, but rather some interesting orders picked by the team at Lance Ippolito Trading.
When you look at these plays, always take the market maker move into consideration.
You can be right on the direction but still lose money if the stock doesn’t move enough. That’s where the market maker move comes in clutch.
With puts, they’re often downside hedges in case a stock tanks, especially around earnings. The further out of the money they are, the more likely they are to be hedges.
Also be sure and check when the company’s earnings date is because many of the plays we post here are centered around earnings!
And finally, always remember the golden rule when it comes to buying calls: Buy dips, sell rips — and don’t chase!
If a stock’s moved a ton already today, maybe wait for a pullback.
There is inherent risk in trading. Trade at your own risk.
Note: If no date is listed after the month, it’s the monthly expiration (third Friday).
Graham Lindman
Graham Lindman Trading
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
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