August 17, 2017

Archives for October 2011

High-Probability, Mean-Reversion Strategy – Major Benchmarks Reach Short-Term Extreme

The S&P 500 (SPY) has pushed 11% higher since its low set last Tuesday. It has indeed been a "rip your face off" type of rally with many bears left for dead. I added two more positions today: one in the High-Probability, Mean-Reversion Strategy and one in the Theta Driver Options Strategy. The latter certainly looks to be in much better shape at the moment, but I believe we will witness a decent pullback over the coming days. Why? As I said before, the major benchmarks are currently in a short-term overbought state, but now all of them what has been strong overhead resistance. Furthermore, we had a very large gap today in all of the major indices that went unclosed. Combine the three and the risk/reward leans heavily towards a … [Read more...]

Short-Term, High-Probability, Mean-Reversion Options Indicator

We had our first trade for the month of October today in the High-Probability, Mean-Reversion Options Strategy. I am not going to discuss the trade in detail (just yet) as it would not be fair to those of you who pay for my newsletter services, but I will tell you that tomorrow could bode very interesting for my current position. If the jobs number pleases Wall Street and the market gaps higher I will be taking another position in the High-Probability, Mean-Reversion Options Strategy tomorrow. As for the Theta Driver Options Strategy, if the market moves higher again tomorrow I will be placing another trade in the strategy. With October options expiration only 15 days away, our current position has over a 90% chance of success. If you … [Read more...]

Short-Term, High-Probability, Mean-Reversion Strategy – Increase Your Probability of Success

With options, you can control with precision, the amount of risk and type of risk you wish to take in any given trade in any situation. One of my favorite strategies is selling vertical call/put spreads like in the Theta Driver Options Strategy. Let me explain. And please understand I am keeping it simple for conceptual reasons. Once, you understand the basics we can really dig deep to understand how to apply risk-manangement. For example, if a trader who only trades stocks or ETFs (not options) is bullish and buys a stock for $50 and at the same time I am able to sell a 44/42 vertical put spread (which is a strategy that bets the same underlying stock  will stay above $44 by options expiration) for $.25 ($1.75 is max risk). If … [Read more...]

Short-Term, High-Probability, Mean-Reversion Options Indicator

September was another great month for the options strategies. The High-Probability, Mean Reversion Options Strategy finished the month with a 7.4% gain in the portfolio. While the Theta Driver Options Strategystarted its first month with a 13.6% return on the first trade. The strategy's second trade should close out at October options expiration with a gain of 14.2%. Not a bad way to start off the Theta Driver Options Strategy. Both strategies work extremely well together as there is little correlation between the two options strategies. The High-Probability, Mean-Reversion Options Strategy takes advantage of short-term extremes in the market by placing directional trades (long calls or long puts) for a trade duration of 1-5 … [Read more...]

Build a Portfolio the Right Way!

No longer are the days of diversifying a basket of stocks. Now you can create your own personal hedge fund by using several systems or strategies. This is why I have created the High-Probability, Mean-Reversion strategy and the Theta Driver strategy. Both have a low correlation to each other. (According to Modern Portfolio Theory, you'll want to build your personal hedge fund using a collection of systems that are not correlated to each other- that is, do not tend to move in the same direction at the same time.) The High-Probability, Mean-Reversion strategy takes advantage of short-term extremes in the market by buying (long) calls or puts whereas the Theta Driver strategy sell options assuming slight directional leanings, but allows … [Read more...]

Weekend Report

Another interesting week for the market and another great week for our Theta Driver strategy. Our current position is profitable and I will be adding another position next week. As for the High-Probability, Mean-Reversion strategy a trade will be placed early next week so subscribers stay tuned. As always, the Short-Term, High-Probability, Mean-Reversion indicator will be available in the report. I will discussing the aforementioned and more in greater detail in the free upcoming Weekend Report due out Sunday. Sign-up for the Weekend Report. … [Read more...]