Small Caps (IWM) Hit Short-term Overbought Extreme – Potential Trade Ahead
June 30, 2011
New Credit Spread Options Strategy – Beta
The window dressing that typically occurs during quarters end is in full effect.
The Russell 2000 (IWM) has charged higher over the past four trading days and yet the 86/88 IWM put vertical that I sold is still well-positioned. At $82.90, IWM is still roughly 3.6 percent away from the short strike.
I like this scenario. IWM has moved into an extreme overbought state and as a result I will most likely place a trade in the High-Probability, Mean-Reversion strategy tomorrow. IWM or another high-beta ETF will be the underlying of choice, if indeed a trade occurs. This should bring the IWM credit spread back to break-even with the potential of making some nice gains if a trade occurs and IWM moves lower into a neutral state.
Again, I like this scenario because now both of the options strategies are working in unison. I am able to collect premium in the Credit Spread strategy while patiently allowing time decay to works its magic. And, while I allow the time decay to eat away at my credit spread I am able to play short-term extremes in the ETFs I follow in the High-Probability, Mean-Reversion strategy. Intermediate and short-term options strategies at work.
Just like diversifying a portfolio of stocks, you should do the same when investing with options – diversify your options strategies.
Here it is: the first trade in my new Credit Spread Options Strategy, officially named Crowder’s Credit Spreads. I will continue to go over the trade in full detail in the Free Weekly Options Report.
Market Mumbo Jumbo
Summary
Same message: Not much has changed over the past few weeks - range-bound trading persists. I appears we could see the markets move sideways for a few more months. Are the summer doldrums already upon us? How long can SPY stay in this range of roughly $126 to $137? The question is, while I continue trading extremes in the HPMR strategy , how can I take advantage of the range bound movement at the same time. You guessed it – a credit spread! I will discuss this further in Weekly Options Report.
If you haven’t already, don’t forget to sign-up for my Free 30-day trial.
Also, for those of you who live on Facebook. You can access my daily info on the social network as well. Just click on LIKE.
Options Strategy Indicator – Overbought / Oversold Extremes
High-Probability, Mean-Reversion Options Indicator
Credit Spread Strategy Update – Market Remains Range-Bound
June 28, 2011
Quick Options Strategy Review
I just wanted to remind everyone that I placed my first trade in the New Credit Spread Options Strategy, or should I say Crowder’s Credit Spreads. You can check the official trade in the link below.
As it stands the credit spread is worth approximately $.48 per contract. I was able to purchase the credit spread in IWM for $.34 so the trade is currently down $.14 per contract. Certainly nothing to worry about at the moment, as the underlying IWM is still 5.1% away from the short strike at 86. Of course, if IWM continues to move sharply higher over the next few days then I might have to take a closer look at potential adjustments.
The window dressing advance that typically occurs during the end of each quarter should fizzle out soon enough. With IWM nearing an extreme short-term overbought state I would expect to see a short-term decline once the upcoming holiday passes. However,the days surrounding July 4th are known to be quite bullish on a seasonal basis, so I will be keeping a close eye on this one.
Quite honestly, there might be the potential to turn this spread into an Iron Condor by adding a bull put spread, but I want to see what the market offers before I make that decision.
Stay tuned.
Here it is: the first trade in my new Credit Spread Options Strategy, officially named Crowder’s Credit Spreads. I will contniue to go over the trade in full detail in the Free Weekly Options Report.
Market Mumbo Jumbo
Read Frederick Ruffy’s Daily Options Report – he does a great job over at Seeking Alpha.
Options Indicator – Overbought – Oversold
Surpisingly, none of the ETFs I follow in the High-Probability, Mean-Reversion Indicator have moved into a short-term extreme.
You can see all of the performance results for the High-Probability, Mean-Reversion strategy here.
Summary
Same message: Not much has changed over the past few weeks - range-bound trading persists. I appears we could see the markets move sideways for a few more months. Are the summer doldrums already upon us? How long can SPY stay in this range of roughly $126 to $137? The question is, while I continue trading extremes in the HPMR strategy , how can I take advantage of the range bound movement at the same time. You guessed it – a credit spread! I will discuss this further in Weekly Options Report.
If you haven’t already, don’t forget to sign-up for my Free 30-day trial.
Also, for those of you who live on Facebook. You can access my daily info on the social network as well. Just click on LIKE.
What is an Option? More Importantly, How Do I Trade Options?
June 27, 2011
What is an option you ask? More importantly, how do I use options to enhance my portfolio returns.
The second question is by far the more difficult question to answer because it requires a personal look into how you see yourself as an investor. One thing I I can guarantee – there is an option strategy that exists that you will cater to your needs. Whether looking for a pure hedge to your current stock positions, a super aggressive weekly call or put options or somewhere in the middle, you should be using options to assist your investment needs. If you don’t you are making a huge mistake.
Yes, I agree – there is a lot of bulls$%^ options services out there touting outlandish gains. 500% profits in 2 days, 912% profits in one day, etc. You know what I am talking about it. Don’t believe them. Yes, you can make a quick winner on occasion, but it is the equivalent of hitting a single number on a roulette table – it is possible, but more importantly, it is not sustainable. If that is what you are looking for then you are on the wrong website.
My options strategies are not “get rich quick” strategies, rather sound options strategies based on three basic ideas – patience, position-sizing, and long-term performance.
After speaking with hundreds of investors, I discovered that the majority of investors were not looking for a ‘get rich quick’ scheme, or a foolproof method of trading options (we all know there isn’t one). What they wanted was a service with established capital preservation goals and historically proven long-term successful investment strategies. They wanted options strategies that would produce consistent, modest gains month after month, year after year. They also wanted to know that unnecessary risks were not being taken, but rather a methodical, tested set of rules were being utilized which would produce long-term gains.
My options strategies were born from the collection of ideas mentioned above. After trading almost every known options strategy, I fulfilled the requests of the investors and traders I spoke with and have identified several historically proven stock options strategies for long-term success in bull and bear markets. Again, all of my options trading strategies are based on three simple principles: patience, position-sizing, and a focus on long-term performance.
I encourage you to learn more about my stock options strategies by joining my FREE weekly options newsletter. Every day in my daily blog I will provide an in-depth look at my trading strategies, including specific trading guidelines. Diversify your portfolio, better yet, educate yourself with one of my options strategies.
It might not be the options strategy for you, but for a Free 30-day trial why not give it a try.
Also, for those of you who live on Facebook. You can access my daily info on the social network as well. Just click on LIKE.
Options Indicator – Overbought – Oversold
None of the ETFs I follow in the High-Probability, Mean-Reversion Indicator have moved into a short-term extreme. I will be back with the indicator chart tomorrow. Stay tuned.
You can see all of the performance results for the High-Probability, Mean-Reversion strategy here.
Daily Options Links of Interest
Have a wonderful evening!
Andy
High-Probability, Mean-Reversion Options Strategy Continues Success – Up 43.1% Since Inception
June 23, 2011
Quick Options Strategy Review
The High-Probability, Mean-Reversion Options Strategy reaped another gain today. The successful trade pushed the strategy to a new high – +43.1% since its inception eight months ago. You can see the performance results for the High-Probability, Mean-Reversion options strategy here. The success has been incredible so far and I am nearing a limit to my newsletter. If you are indeed interested in my service please sign-up now to secure I spot. I want to keep a cap on subscribers for various reasons including manageable service and more importantly, keeping volume at a reasonable level on the options I choose for my trades.
The first trade in my new Credit Spread Options Strategy is right where it started a few days ago. Again, I will be going over the trade in full detail in the Free Weekly Options Report this weekend. Stay tuned.
Market Mumbo Jumbo
The market gapped significantly lower at the open on news that the Obama administration and the IEA were going to dip into the Strategic Reserves. The global effort would add 60 million barrels to the market, with over 30 million barrels coming out of the United States. It is the first time since Hurricane Katrina and only the third time the IEA and the U.S have joined together to release barrels to market.
The announcement helped to push oil and oil related stocks significantly lower. That is, until late in the afternoon when news that Greece would be rescued by the EU under a five year austerity plan. The market spiked higher after the news and as it stands the futures are higher. The bulls are back, but for how long?
Options Indicator – Overbought – Oversold
None of the ETFs I follow in the High-Probability, Mean-Reversion Indicator have moved into a short-term extreme.
You can see all of the performance results for the High-Probability, Mean-Reversion strategy here.
Daily Options Links of Interest
Summary
Same message: Not much has changed over the past few weeks - range-bound trading persists. I appears we could see the markets move sideways for a few more months. Are the summer doldrums already upon us? How long can SPY stay in this range of roughly $126 to $137? The question is, while I continue trading extremes in the HPMR strategy , how can I take advantage of the range bound movement at the same time. You guessed it – a credit spread! I will discuss this further in Weekly Options Report.
If you haven’t already, don’t forget to sign-up for my Free 30-day trial.
Also, for those of you who live on Facebook. You can access my daily info on the social network as well. Just click on LIKE.
High-Probability, Mean-Reversion Options Indicator
Straight Call Option and a Credit Spread
June 21, 2011
The long awaited trade finally came to fruition today in the High-Probability, Mean-Reversion Options Strategy as well as my new High-Probability, Mean-Reversion Credit Spread Option Strategy.
Subscribers were obviously privy to the former trade and if all goes well and the market ticks down tomorrow, we could see another nice gain in the options strategy.
As for the new Credit Spread options strategy here is the trade that was placed:
(click to enlarge)
As you can see I sold a vertical call spread or a bear call spread, whichever name you prefer it doesn’t matter to me. I was able to sell the spread for $.34 which will give me a 17 percent gain (excluding commissions) if the Russell 200 proxy ETF (IWM) closes below 86 at August options expiration in 56 days. Of course, I will most likely hold on to the spread for that long as I am perfectly happy taking a 10 percent gain and moving on to the next trade. I only wanted to touch on the trade tonight as I plan to go more in depth as the week progresses with a full analysis in the Weekly Option Report.
Options Indicator – Overbought – Oversold
*No chart overbought/oversold chart tonight. There are a few extremes that have entered the market, so another leg up tomorrow and we should see almost all of the ETFs I follow enter into a short-term overbought state. With that being said I should have the chart for you tomorrow afternoon. Stay tuned!
You can see all of the performance results for the High-Probability, Mean-Reversion strategy here.
Daily Options Links of Interest
Summary
Same message: Not much has changed over the past few weeks - range-bound trading persists. I appears we could see the markets move sideways for a few more months. Are the summer doldrums already upon us? How long can SPY stay in this range of roughly $126 to $137? The question is, while I continue trading extremes in the HPMR strategy , how can I take advantage of the range bound movement at the same time. You guessed it – a credit spread! I will discuss this further in Weekly Options Report.
If you haven’t already, don’t forget to sign-up for my Free 30-day trial.
Also, for those of you who live on Facebook. You can access my daily info on the social network as well. Just click on LIKE.
Potential Options Trade – Short-term Overbought
June 20, 2011
Market Mumbo Jumbo
The market moved higher today and pushed a few of the sector ETFs near a short-term overbought extreme.
According to Jason Goepfert of Sentimentrader, “Tuesdays are good “bottoming” days, and June is a good bottoming month. The 14th and 15th trading days of the month are also higher-probability days for a low”. Moreover, the week after June option expiration has been negative 72 percent of the time since the inception of the S&P 500 futures. Every one of the past 6 years has been negative during this week.
As the market moves ever closer to a short-term overbought I expect another test of the recent lows in SPY. A gap higher at the open in SPY and I will most likely take the first position of the month in the High-Probability, Mean-Reversion Options strategy. Long overdue, but again, I never force a trade – I always allow the trade to come to me.
Also, I dis not place a credit spread today so stay tuned because tomorrow will be the day. Again, stay tuned.
Options Indicator – Overbought – Oversold
Several of the ETFs I follow in the High-Probability, Mean-Reversion strategy have pushed into a short-term extreme state including UNG, EPI and EPU. If all goes well tomorrow, we could see a trade in one of the aforementioned ETFs or potentially one of the major market benchmarks. Subscribers stay tuned!
You can see all of the performance results for the High-Probability, Mean-Reversion strategy here.
Daily Options Links of Interest
Summary
Same message: Not much has changed over the past few weeks - range-bound trading persists. I appears we could see the markets move sideways for a few more months. Are the summer doldrums already upon us? How long can SPY stay in this range of roughly $126 to $137? The question is, while I continue trading extremes in the HPMR strategy , how can I take advantage of the range bound movement at the same time. You guessed it – a credit spread! I will discuss this further in Weekly Options Report.
If you haven’t already, don’t forget to sign-up for my Free 30-day trial.
Also, for those of you who live on Facebook. You can access my daily info on the social network as well. Just click on LIKE.
High-Probability, Mean-Reversion Options Indicator
Triple Witching – Potential Credit Spread Tomorrow
June 16, 2011
Market Mumbo Jumbo
It has been an interesting options expiration week. The S&P 500 (NYSE: SPY) has lost a total of $0.30 since the close last week - a paltry decline.
However, this did not stop Mr. Volatility from finally making an appearance. Options traders, particularly those of us who sell options premium, can finally rejoice. Options premium has finally moved back into this market. Now if the VIX could just hold 20 and move as high as 35 I would be one happy option trader.
With that being said, I look to place a position at some point tomorrow in the my new credit spread strategy. Stay tuned!
Options Indicator – Overbought – Oversold
Every ETF that I follow basically stay within a short-term neutral state today so I am not going to bother with the charts tonight. Time is limited and I need to concentrate on a few other service-based features than I plan to offer subscribers over the coming weeks.
You can see all of the performance results for the High-Probability, Mean-Reversion strategy here.
Daily Options Links of Interest
Summary
Same message: Not much has changed over the past few weeks - range-bound trading persists. I appears we could see the markets move sideways for a few more months. Are the summer doldrums already upon us? How long can SPY stay in this range of roughly $126 to $137? The question is, while I continue trading extremes in the HPMR strategy , how can I take advantage of the range bound movement at the same time. You guessed it – a credit spread! I will discuss this further in Weekly Options Report.
If you haven’t already, don’t forget to sign-up for my Free 30-day trial.
Also, for those of you who live on Facebook. You can access my daily info on the social network as well. Just click on LIKE.
Options Trading Requires Patience
June 15, 2011
Market Mumbo Jumbo
Yesterday, I stated the rally could be short-lived. The S&P 500 (SPY) moved lower to close Tuesday’s upside gap and kept moving south as the trading day progressed. Not a good sign for the bulls. However, until the $125 level is broken the bulls remain in good standing. A push below $125 and I think a waterfall, capitulation type move could occur. If a sharp decline occurs I would suspect that SPY will see the 12/1 upside gap close at $118.03 (the high from 11/30).
Again, as long as SPY is able to hold the March lows I think the market will be okay. Although, when I say okay, I mean a move back near the top of the established trading range – $125-$137. Let the range-bound trading begin.
Options Indicator – Overbought – Oversold
My message remain s the same.
All of the ETFs I follow in the High-Probability, Mean-Reversion Strategy have moved back into a short-term neutral state. With that being said, I will be patiently waiting on the sidelines until an ETF moves into a short-term extreme. Patience is by far the hardest aspect of trading. Inherently trading is exhilarating so it makes perfect sense to want to do it as frequently as possible. Unfortunately, that goes against the main goal of any strategy which is to make money. Wait, wait, wait and then pounce on a high-probability opportunity. That is how money is made trading – at least if you have a long-term approach to creating and more importantly accumulating wealth.
As for the following I guess I can’t reiterate my sentiment enough.
I do find it interesting that over the years, when these lulls occur subscribers often flee. They want action. They are too short-sighted by the the excitement of trading options. Believe me, we have all been there. If they could only realize that patience coupled with sound risk-management is what makes an options strategy successful.
Remember, CASH IS A POSITION.
You can see all of the performance results for the High-Probability, Mean-Reversion strategy here.
Daily Options Links of Interest
Summary
Same message: Not much has changed over the past few weeks - range-bound trading persists. I appears we could see the markets move sideways for a few more months. Are the summer doldrums already upon us? How long can SPY stay in this range of roughly $126 to $137? The question is, while I continue trading extremes in the HPMR strategy , how can I take advantage of the range bound movement at the same time. You guessed it – a credit spread! I will discuss this further in Weekly Options Report.
If you haven’t already, don’t forget to sign-up for my Free 30-day trial.
Also, for those of you who live on Facebook. You can access my daily info on the social network as well. Just click on LIKE.
High-Probability, Mean-Reversion Options Indicator
Market Remains Range-Bound – Options Strategy Remains Patient
June 14, 2011
The anticipated bounce occurred today. However, I would not get overly excited because the rally could be short-lived.
The S&P 500 ETF (SPY) gapped higher at the open today and never moved lower to close the gap. I would expect to see a close at $128.24 in SPY before the market is able to make any ground. We are already nearing an oversold state in my shortest-term indicators, so it could be a tough few days for the bulls. Although, as long as SPY is able to hold the March lows I think the market could be okay. When I say okay, I mean a move back near the top of the established trading range – $125-$137.
If SPY pushed through strong support at the $125 level then I think we could se a waterfall decline that could take us as low as $118 in SPY.
Options Indicator – Overbought – Oversold
All of the ETFs I follow in the High-Probability, Mean-Reversion Strategy have moved back into a short-term neutral state. With that being said, I will be patiently waiting on the sidelines until an ETF moves into a short-term extreme. Patience is by far the hardest aspect of trading. Inherently trading is exhilarating so it makes perfect sense to want to do it as frequently as possible. Unfortunately, that goes against the main goal of any strategy which is to make money. Wait, wait, wait and then pounce on a high-probability opportunity. That is how money is made trading – at least if you have a long-term approach to creating and more importantly accumulating wealth.
As for the following I guess I can’t reiterate my sentiment enough.
I do find it interesting that over the years, when these lulls do occur that some subscribers flee. They want action. The are too short-sighted by the the excitement of trading options. Believe me, we have all been there. If they could only realize that patience coupled with sound risk-management is what makes an options strategy successful.
Remember, CASH IS A POSITION.
You can see all of the performance results for the High-Probability, Mean-Reversion strategy here.
Daily Options Links of Interest
- Seventh Straight Week Of Losses?
- Options in Focus -VIX
- The Challege – Finding Stock Options Strategies that Will Reap Profits Over the Long-Term
Summary
Same message: Not much has changed over the past few weeks - range-bound trading persists. I appears we could see the markets move sideways for a few more months. Are the summer doldrums already upon us? How long can SPY stay in this range of roughly $126 to $137? The question is, while I continue trading extremes in the HPMR strategy , how can I take advantage of the range bound movement at the same time. You guessed it – a credit spread! I will discuss this further in Weekly Options Report.
If you haven’t already, don’t forget to sign-up for my Free 30-day trial.
Also, for those of you who live on Facebook. You can access my daily info on the social network as well. Just click on LIKE.
High-Probability, Mean-Reversion Options Indicator
High-Probability, Mean Reversion Options Strategy – Nasdaq 100 (QQQ) Hits Short-Term Extreme
June 13, 2011
The VIX is the hot topic right now among options traders.
Most of us now know that last week marked the sixth straight decline for the S&P 500 (SPY). Yet, options traders are puzzled by the fact that the VIX (known among many as the “fear index”) continues to struggle to push above 20. A push past twenty is viewed among many options traders as bearish for the market.
However, there is a large contingency of options traders who view the lack of an accelerated move for the VIX as bullish. A reading below 20 means that investors are complacent as fear towards the current state of the market is low. The bulls view the correction as short-lived and more importantly anticipated.
I have to agree with the latter, because there are some true short-term extremes in the market including the equity put/call ratio, Nasdaq TICK, Up Issues Ratio, Up Volume Ratio, Stock/Bond Ratio, AAII Sentiment Survey – the list goes on.
With that being said, I would prefer to see another spike lower or capitulation to place the first credit spread in the HPMR credit spread options strategy. Stay tuned!
Options Indicator – Overbought – Oversold
The tech-heavy Nasdaq 100 ETF (QQQ) has reached a short-term oversold state. If the index ETF opens lower tomorrow there could be a potential trade in the HPMR options strategy. I love trading the QQQs for various reasons and I absolutely love the set-up right now. The options strategy has been patiently waiting a nice opportunity to extend the gains. Hopefully, tomorrow will be the day. Let’s see what the indicators tell us morning.
As for the follwing I guess I can’t reiterate my sentiment enough.
I do find it interesting that over the years, when these lulls do occur that some subscribers flee. They want action. The are too short-sighted by the the excitement of trading options. Believe me, we have all been there. If they could only realize that patience coupled with sound risk-management is what makes an options strategy successful.
Remember, CASH IS A POSITION.
You can see all of the performance results for the High-Probability, Mean-Reversion strategy here.
Daily Options Links of Interest
- One Way to Play A Rising VIX
- Options Strategists Eyeing 20 on the VIX
- Watch Tutorial - Options Sizzle Index
Summary
Same message: Not much has changed over the past few weeks - range-bound trading persists. I appears we could see the markets move sideways for a few more months. Are the summer doldrums already upon us? How long can SPY stay in this range of roughly $126 to $137? The question is, while I continue trading extremes in the HPMR strategy , how can I take advantage of the range bound movement at the same time. You guessed it – a credit spread! I will discuss this further in Weekly Options Report.
If you haven’t already, don’t forget to sign-up for my Free 30-day trial.
Also, for those of you who live on Facebook. You can access my daily info on the social network as well. Just click on LIKE.
High-Probability, Mean-Reversion Options Indicator
