It's been quite a bounce in the markets since the end of October. And we expect to see many more such bounces in the days and weeks ahead as market participants battle to find equilibrium in a tape that has definitely been thrown off balance since early October's swoon. The thing is, our bet is that we'll see even more impressive bounces -- but from lower levels.

Our new regime thesis hasn't changed (yet), and as such, we view any bounces as great opportunities to establish new short positions in the weakest names in the market. And one of those weak names that we've been stalking is JP Morgan $JPM.

One of the beauties of options trading is even when we don't have the highest conviction in a trade, we can still participate by lowering or shifting our risks.  I come from the school that says spread your bets out across the market -- small -- because the constant pursuit of edges will yield results over the long run as long as no bad individual trades are too big to take us out.

In our most recent monthly All Star Options Conference call, we highlighted a desire to play for a bounce in bonds. In the days since, the market gods are either taunting us, or smiling on us -- offering better entry levels.

This is the video recording of the November 2018 Conference Call for Members of All Star Options

It is not often that we fade stocks here at All Star Options. Mostly, we like to identify emerging trends or smart entry points in long established trends and hop along opportunistically for the ride. But given the market environment we're in, we believe it is only a matter of time before everyone gets touched. And we've identified a possible "home run" opportunity to get short a stock that -- gasp! -- printed new all time highs twice this week! It might truly be the last man standing.

It has been a wild couple of weeks for participants in US equities. Up is down. Black is White. Dogs sleeping with cats. This is what happens when market regimes go through change. The ripples can be seismic.

The one thing we can count on as options traders is that implied volatility -- more specifically, the fear premium being priced into options right now -- will eventually subside. If there is anything that can be counted on to be "mean-reverting" in this crazy world of ours -- it is most definitely implied volatility. This means we definitely want to be on the hunt for opportunities to put elevated options premiums to work for us. We want to be net sellers of options here.

With 53 days until December options expiration, now is the ideal time to start scanning the most liquid ETF options in our universe for income trades.

Disney is another stock that has been on our watch list for a short trade, but has stubbornly held on... until today. We had been waiting for $DIS to close below $113 and on Wednesday our criteria was finally met.

Could the broader markets be due for an oversold bounce here? Sure. But we think Disney's price action (better late than never) was an ugly omen for the start of a pretty bearish movie coming in this name over the next several weeks.

We don't do a lot of "earnings" plays here at All Star Options. We don't scare away from entering smart trades with defined risk ahead of earnings reports, but only if we feel there's a larger play in the cards.

However, when all the stars align, we'll consider specific opportunities.

We've got one all lined up with Avis, $CAR.

So far, this new corrective phase in U.S. stocks is playing out according to script: Deep down moves, interrupted by gravity-defying bounces that suddenly get saddled with lead weights which drag stocks back down with the fishes. Sorry for the horrible Godfather-inspired mixed metaphor.

In this type of environment, we want to be patient with our risk-defined positions when they go against us, yet aggressive when they go our way. This one simple mindshift will be what separates the winners in a bear market from the pretenders.

We laid out our first list of stocks we want to be short in a correction back on October 12. So far, this list is treating us well. The next name that we're ready to tackle is Cisco $CSCO.

The biggest rallies happen in corrective or bear markets. They are nice, but often temporary. Stay nimble, my Trader friends.

— Sean McLaughlin 📈 (@chicagosean) October 16, 2018

I posted this on twitter today as the latest round of dip buyers were tripping all over themselves to buy up any and all perceived bargains being offered by Mr. Market. While the cumulative bounce for the past three trading days has been impressive, I've traded through too many corrections and bear markets to be tricked this easily into thinking the storm has fully passed.

Instead, I'm welcoming bounces like this because it more easily reveals the weakest names that are struggling to rebound. The stocks that haven't bounced or are struggling in relative terms to rise with their brethren, these are the names we want to press into on the short side. They are the ones likely to lead the carnage on the next leg down.

Next up on our target list: Intel $INTC.

Where I live in Colorado, we received our first snowfall of the season. And it meant business. Today, we woke up to 8 inches of overnight snow and it kept falling all morning. Yesterday, it was nearly 70 degrees and sunny. It's the time of the year when seasons change quickly around here. Not unlike the markets this week.

My wife and I have both been more mindful of our diet this year, and our four year old son is growing like a beanstalk. And as the season is changing rapidly, we find ourselves scrambling through our closets looking to locate last winter's clothes, only to find most of them don't fit any of us. So, comically, we find ourselves a little ill prepared for the new winter.

This all feels very fitting as the markets most definitely and rapidly changed seasons this week. And we were still wearing a lot of last season's positions. As you can imagine, that left us pretty uncomfortable.

What a week, eh?

Long trades getting blown up all over the place. Luckily for us, we'd had a good run coming into last week with opportunities to take profits in a lot of our positions. That makes the exits and adjustments that have been forced upon us the last few days a bit more palatable. In both cases, the profits and losses were taken according to our plans as laid out when we entered into the trades in the first place. Weeks like this are a good reminder of why we put trade plans together up front to begin with. When markets start getting wacky, the last thing we want to be doing is scrambling in the wind, trying to keep our heads about us as we're struggling to assemble puzzle pieces on a board that won't stay still.

The good news is, rising volatility will likely offer us some good higher probability income trades in the coming days and weeks to hopefully more than make up for this week's reality check.

U.S. stocks gave everyone a little reminder last week that stocks don't always go straight up in Bull Markets. Significant gains will be seen in the drivers of every bull run, but not without pauses and pullbacks along the way. Overall, we're still bullish here, but more cautiously so and looking to minimize our risks on long plays as best we can.

If the markets are currently undergoing a pause that refreshes, then we expect the resumption to highs will be lead -- at least in part -- by semiconductors. With that in mind, we want to be buying dips amongst the leaders in this space and we have a great candidate lined up.