June 29, 2017

Archives for June 2011

Small Caps (IWM) Hit Short-term Overbought Extreme – Potential Trade Ahead

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 … [Read more...]

Credit Spread Strategy Update – Market Remains Range-Bound

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 … [Read more...]

What is an Option? More Importantly, How Do I Trade Options?

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. … [Read more...]

High-Probability, Mean-Reversion Options Strategy Continues Success – Up 43.1% Since Inception

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 … [Read more...]

Straight Call Option and a Credit Spread

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 … [Read more...]

Potential Options Trade – Short-term Overbought

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 … [Read more...]

Triple Witching – Potential Credit Spread Tomorrow

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 … [Read more...]

Options Trading Requires Patience

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 – … [Read more...]

Market Remains Range-Bound – Options Strategy Remains Patient

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 … [Read more...]

High-Probability, Mean Reversion Options Strategy – Nasdaq 100 (QQQ) Hits Short-Term Extreme

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 … [Read more...]