Options Strategy Trade
August 31, 2011
I placed a trade in the High-Probability, Mean-Reversion strategy yesterday. The trade is slightly underwater, which is obviously not the ideal situation, but I remain pleased with the risk/reward of the trade.
Three out of the four major indices are currently in a short-term overbought state. The major indices have hit an area of strong overhead resistance. There remains an unclosed gap from Monday and we are entering the weakest performing month of the year. All of the aforementioned information lead to my opinion that the market is due for a short-term correction.
Overbought and Ready
August 29, 2011
I am keeping it short tonight.
Hurricane Irene took its toll on my home state. Vermont took quite a hit. The remnants left behind from Irene will last for quite some time. Fortunately, other than a loss of power and being stranded on the mountain on which I live things are quite normal.
Anyway…
It has been several weeks since our last trade in the High-Probability, Mean-Reversion options strategy and the time has finally come for a trade. If, (and that is a big if) the market opens higher tomorrow I expect to see several signals trigger which will certainly mean that a trade alert is imminent. Subscribers stay tuned.
Also, for those of you who are subscribers to the Theta Driver strategy, I plan on making a trade in the next two days. I know I stated that last week, but the bulls just seemed to have some short-term steam, so I wanted to wait until the market reached a short-term overbought state before adding another position. Stay tuned!
High-Probability, Mean-Reversion Indicator
August 25, 2011
I am going to keep it short tonight.
As you can see per the chart below, all of the ETFs I follow in the High-Probability, Mean-Reversion Options Strategy are in a neutral state.
However, there are some very good opportunities in the Theta Driver Options Strategy and I plan on making a trade in the strategy tomorrow. I would expect after Big Ben speaks we will see a few short-term extremes enter the market which should give us a few potential set-ups in the HPMR strategy. I am still waiting patiently for a trade. Subscribers stay tuned, particularly those of you who are members of my Theta Driver strategy.
Until then,
Andy
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Credit Spread Opportunities Are Bountiful
August 24, 2011
The pre-market action has really left the High-Probability, Mean-Reversion strategy with very little opportunities for entry. There are still a few potential trades in the work, but if August goes without a trade then so be it. I am not going to force a trade. Trading to fulfill some type of quota is ridiculous. Trading is not based on the calendar, it is based on opportunities and unfortunately the opportunities have been non-existent. However, as we all know they will be back and be back with vengeance. That just seems to be how the market and moreover, how the High-Probability, Mean-Reversion strategy works.
As for the Theta Driver strategy, the trade is currently worth $.09. The underlying of the trade is still well below the short strike of the trade. Right now credit spread opportunities are bountiful so I will most likely place another credit spread trade before the week ends. Subscribers stay tuned!
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Options Trade in the Works?
August 23, 2011
I am going to keep it short tonight.
The market kicked up higher at the open and never turned back. As a result, I did not make a trade in either of the strategies today, but tomorrow is a new day and there are still quite a few viable trades out there as you can see in the High-Probability, Mean-Reversion chart below. So, again, subscribers stay tuned.
Market Mumbo Jumbo
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Options Trades in the High-Probability, Mean-Reversion Strategies
August 22, 2011
A trade in the High-Probability, Mean Reversion Strategy looks likely if IWM happens to open flat or open tomorrow. Of course, there are a few other thng is that need to line-up, but the first trade of a slow August seems likely. Subscribers stay tuned!
Our latest Theta Driver Options trade looks very good. Last Monday, I placed our first trade for a credit of $0.25 and thanks to some help from the bears (although a flat to slightly higher market would have worked as well, just not so quickly) the credit spread is now worth less than $0.05. With only $0.05 and 25 days left until September expiration I will mostly likely lock in the gain for roughly a 9% gain (including commissions) and place another Theta Driver trade within the next few days. Volatility remains high so we might be able to extend our gains this months. My goal is to seek out a credit spread trade that allows a 10-12% gain over the next 25 days. I might have to take a bit less if volatility declines sharply tomorrow, but my guess is that unless the market moves sharply higher, volatility will remain above 40 which will allow me to continue to sell some great premium.
For all of those who are still interested in the Theta Driver strategy I still have a few remaining spots. Once the spots are filled I intend to close the strategy to new members. I hate to keep mentioning this, but I have had quite a few of you email me over the past week so I just wanted to remind you.
Market Mumbo Jumbo
If you haven’t already, don’t forget to sign-up for my Free 30-day trial.
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High-Probability, Mean-Reversion Indicator – Advantages of Diversified Options Strategies
August 18, 2011
Before I get started I want to discuss a lingering frustration of mine – the financial services arena.
Yesterday, I posted a WSJ interview with Mark Cuban. Mark had a few very insightful ideas for the public including “buy and hold is a crock of s#$!” and “diversification is for idiots.” I definitely agree with Mark’s first statement – buy and hold is no longer a viable strategy. However, I think he needs to expand on his last statement. While I do agree that diversification in stocks is well, not useful when applied in the typical manner. Because most over-diversify. And quite honestly, I don’t bother investing in stocks. It ties up way too much of my capital and I can create far better statistical advantages using options rather than trying to guess how much a stock will appreciate over the long-term. It just doesn’t make sense to me. Diversifying options strategies does make sense to me. I will go into great detail in a future post.
Another complaint stems from a recent call by a I listened to by a small financial services firm. They were touting guaranteed returns with of course no risk. Really? Seriously? Their answer – fixed annuities. I had to laugh. And then I started to get upset. They were preying on the fear that the financial media has created over the past few weeks. They were taking advantage of hard-working, worried investors who lack the knowledge of how to effectively invest their money.
They went on to boast about how they were taking the steps necessary during these times of crisis by moving into more defensive stocks, etc. This was the best way to create a conservative portfolio. The insanity went on and on.
How about this – as an effective money manager learn how to appropriately and effectively use options to hedge your risk. The fact is, most active money managers have no idea how to use options other than buy out-of-money calls or puts. They don’t realize that times of crisis lead to above normal volatility that creates high options premium and the opportunity to make lots of profits. Why? I don’t know. Options are not that difficult. Yes, it takes a little hard work, but why not take the time to learn how to use options on your own. You are certainly not going to find an abundance of money managers who know to use options in an appropriate and effective way. So why not take the leap and learn.
Oh yeah, and what about the notion of cash is a position. I think we all know my thoughts on this topic.
People are starting to realize the benefits of options. They are catching on. I truly think the next 10-15 years are going to be revolutionary for options. I have already witnessed an enormous change in the options industry thanks to the likes of Tom Sosnoff, Thinkswim, Optionsxpress the CBOE. These are just a few of the major players trying to bring options to the mainstream and thankfully they are winning the battle.
Anyway, I have so much more to say, but I am not going to make this post long-winded as I always have tomorrow to rant.
Quick Thought on the Options Strategies
This is exactly how diversified options strategies should work.
While the High-Probability, Mean-Reversion Options Strategy sits idle, patiently waiting for short-term extremes, the Theta Driver Options Strategy is taking advantage of time decay.
It has taken some time, but I now feel as though I have created the perfect blend for my style of options trading.
By employing both strategies I enjoy the benefits of trading a short-term, speculative options strategy alongside an options income strategy. Both are simple options strategies, yet very effective. Now that the High-Probability, Mean-Reversion strategy has hit a slow patch with no true signals over the past three weeks, you can start to see the true benefits of the Theta Driver strategy. Collecting premium, taking advantage of time decay by selling credit spreads offers income while I sit patiently for a short-term extreme to enter the market in one of the ETFs I follow for the strategy.
I might add one more options strategy to the mix, but for now I want to focus on teaching the High-Probability, Mean-Reversion Options Strategy and the Theta Driver Options Strategy.
Theta Driver Options Strategy
My first trade in the Theta Driver (trade entered on Monday 8/15) is already worth 7.5%. I will probably take it off if the market moves lower to take advantage of the growing premium created by increased market volatility. If I can buy the spread back for $0.05 or less over the coming days I will. I am always for locking in a profit and taking risk off the table. Especially, if better opportunities are available. Subscriber stay tuned!
High-Probability Options Strategy
More and more extremes have entered the market and a trade could be in the works over the next few trading days. If I do place a trade I will cut back my position-size. There are way too many uncertainies out there right now. And, of course, I want to see true short-term extremes before even thinking about placing a trade in this environment.
Market Mumbo Jumbo
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Buy and Hold is A Crock – Cash is a Position – Diversify Through Strategies Not Stocks
August 17, 2011
The major market averages continue their struggle to push higher over the past three trading days. I still think the market pulls back to close the 9/1/10 gap over the next few months.
However, as I always say, all of the noise truly doesn’t matter to me, I trade market extremes and volatility. So, it doesn’t matter to me where the market goes or how it performs over the long-term. These are uncertainties that have zero statistical advantages.
I don’t diversify in stocks – I diversify in strategies. This is how to effectively invest your money. This is why I use the High-Probability, Mean-Reversion Strategy and the New Theta Driver strategy. It exposes me to a limited number of days in the market. I am often in cash. I only trade opportunities and the opportunities that I trade have to have statistical advantages.
Here is a great video of Entreprenuer Mark Cuban. Love him, or hate him one thing is certain – you can’t deny his success. While I think his options strategy of buying out-of-the-money calls and puts is a bit naive (I would love to speak with him about more effective options strategies as I know he would be responsive), Mark seems in line with what I have been trying to convey for years about investing. Cash is a position. Take advantage of extremes, etc. Don’t miss this video – very insightful. Check it out!
Theta Driver Options Strategy
I placed my first official trade in the Theta Driver options strategy Monday. For those of you still interested I have a few remaining spots left 8 to be exact.
I am very excited about my new income options strategy because I have said for years that diversifying your options strategies is the best way to make long-term consistent gains in the options market.
High-Probability Options Strategy
As you can see below there are not that many ETFs in an extreme state. However, I have my eye on DBA at the moment. If the agriculture ETF opens higher tomorrow there could be a trigger in the strategy. This could be the first signal for August. Remember, it is the long-term results that we are after. There will be slows periods just like there will be periods of heavier trading. I do not force trades. Subscribers stay tuned for an email alert/tweet if the trade indeed comes to fruition.
Market Mumbo Jumbo
If you haven’t already, don’t forget to sign-up for my Free 30-day trial.
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New Theta Driver Trade Options Strategy – Potential High-Probability, Mean-Reversion Trade Tomorrow
August 16, 2011
Theta Driver Options Strategy
I placed my first official trade in the Theta Driver options strategy today. For those of you still interested I have a few remaining spots left 12 to be exact, so if you join today I will send you the trade so you can get in for a reasonable, if not better price than what I was able to get into today.
I am very excited about my new income options strategy because I have said for years that diversifying your options strategies is the best way to make long-term consistent gains in the options market.
High-Probability Options Strategy
Finally, a trade is near. My first trade in quite some time could occur over the next few days. As I have always said, patience is the key ingredient to the High-Probability, Mean-Reversion strategy and after six years, subscribers are finally starting to understand the nuisances of the strategy -one of them being patience. Patience to wait for trades to come to fruition – not forcing trades.
Market Mumbo Jumbo
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.
Last Chance – Theta Driver Options Strategy
August 11, 2011
Okay, as most of you know I abhor doing this – the sales pitch. However, I do want all of you to have a fair chance to get in before the Theta Driver options strategy fills.
I will be sending out a mass email later and my guess is that the strategy will be closed to new subscribers after that event.
If you are indeed interested in the strategy you can sign-up on the subscribe page here.
This will be the last time I mention the sign-up deadline. I intend on placing my first official trade tomorrow, possibly Monday(I have been showing the strategy here for people to follow over the past few months).
Okay, so now that the “sales pitch” is over (not much of one I know, but I am a trader not a marketer and I take the grass roots approach) it is time to get back to options.
I will be back this weekend with an market update and an update on both strategies. Stay tuned!
Kindest,
Andy
