August 18, 2017

Archives for November 2012

Russell 2000 Hits Short-Term Extreme…Again!!!

The rally that began during the holiday shortened week has continued to the dismay of the bears. However, 1410 on the S&P was the area that most of my contrarian friends were anticipating and well, we're there. I expect the next few days to be quite bearish, but as we all know, no one knows owns  the directional crystal ball...which is exactly why I choose to use credit spreads. Credit spreads, more specifically out-of-the-money bull call, bear put and iron condor spreads gives me a nice margin for error. The December expiration cycle is a bit too close to create a decent margin for error. The premium just isn't there. So, going out to January would be the ideal move. Anything between 56 and 26 days is preferred, so with January … [Read more...]

“Moneyball” Takes Down Wall Street

Before I get started I wanted to let all of you know that I will be opening up my two (possibly three) strategies over the next week. So far, the interest has been overwhelming. I will be limiting the number of subscribers to keep emails down and to make this a very personal experience for subscribers. If you are interested or have any questions please do not hesitate to email me at crowderoptions(at) By now I am sure all of you are aware of statistics guru, Nate Silver. The unabashed numbers geek, professional poker player, baseball statistician and creator of the FiveThirtyEight blog on The New York Times website correctly predicted the outcome of all 50 states. In 2008 he accurately predicted 49 out of 50 states. There … [Read more...]

When Trading Options Use Probabilities to Your Advantage

I am often amazed by the  lack of common sense when it comes to investing. Investors seek the best possible information, unfortunately most turn to the wrong sources. For starters, turning on the television for investment advice, in most cases, is a big no no. Yet, how many people listen intently to the daily drivel coming out of screaming mouths on CNBC. Investors, particularly traders, should know that every trade spouted from these sources have a 50% chance of success. Add in transaction costs and the probability declines further. Yet, the majority of investors and traders take this approach, mostly because they aren't privy to any other form of investing. Self-directed investors aren't aware that there are strategies based purely … [Read more...]

Time to Sell a Few Bear Call Spreads?

Many of the ETFs I follow for my options strategies remain in a short-term overbought state. And the shortest time frame I follow (not shown in the chart below) still shows a plethora of ETFs in an extreme overbought state. Typically, when we see this type of reading the market experiences a short-term reprieve over the next 1-5 trading days. The reason I follow my overbought/oversold indicator is because I believe in the power of mean-reversion, particularly at extremes. Moreover, I am a firm believer in using statistics, not gut instinct, to make trading decisions. As we all know emotions, while difficult to avoid, are a true detriment to self-directed investors. If I see a short-term overbought state like we are currently … [Read more...]

High-Probability, Mean-Reversion Indicator Screaming Short-Term Overbought

As the old Wall Street adage goes, "don't sell a dull market". The S&P 500 came into the holiday shortened week in a short-term "very oversold" extreme. So the bounce this past week came as no surprise. It was the magnitude of the bounce that surprised many. The S&P as seen through SPY climbed 3.7% in a little over 3 days. But now, the bears are salivating as the pot odds move back to their least over the short-term. As seen in the chart below, not only SPY, but all of the major market ETFs have pushed into a short-term overbought state. Moreover, several sectors have moved into a "very overbought" state. Couple the aforementioned extremes with strong overhead resistance and you can quickly see why the bears … [Read more...]

Forward-thinking, statistically-based options strategies for the individual investor. It's all about the probabilities.  It has been a decade of rapid and profound change in the options industry. The information age has allowed investors access to sophisticated forms of investing that were once only available to professionals or the financially privileged. Times have changed. Now we are finally on a level playing field. Individual investors who seek an alternative investment to enhance their current portfolio or simply wish to bring in another source of monthly income will find the various high-probability options strategies I use advantageous. I provide subscribers with a disciplined approach to building wealth over the … [Read more...]