August 20, 2017

Archives for October 2013

High-Probability, Mean-Reversion Indicator

I apologize for being away yesterday. I've spending some quality time with my parents and prepping my daughter (vampire queen) for Halloween. So, with that being said, I'm only going to post the indicator tonight. Volatility has picked up so hopefully the trades I wanted to place earlier in the week will be occurring in the next day or two. I'm a bit frustrated I wasn't able to get my entry, but that's just how things go in the wonderful world of trading sometimes. Until then I will be patiently waiting until my signals hit. Have a great night! … [Read more...]

Sometimes Good Fortune Pays

Today was one of those days. We had network issues today, so I spent most of my day working offline. I haven't done that in a long, long time. As frustrating as the outage was, it saved me a little bit of cash because I was ready to fire off a few directional trades today. After looking back at the SPY chart I would have most likely entered into a trade around $176.80 so I saved myself roughly $0.40 or about $0.15 to $0.20 per option contract. Hopefully, my good fortune continues tomorrow when I attack this market with a few short-term trades. All of the major benchmarks are in an overbought state with SPY reading the most extreme. My intent is to add a few credit spread trade as well as some short-term aggressively directional … [Read more...]

Still Hovering in a Short-term Overbought State Nears the Highs – Could We See A Double Dip?

Roughly one week ago we exited what would be a profitable directional trade in XOP. XOP had climbed into a short-term overbought state, so I decided to short the ETF using puts. Now typically, I am a seller of options, but the set-up was just too good to pass up for an aggressive style trade so I bought a few puts. The result was a 74% gain over just a few trading days. While I'm not going to anticipate similar results this time around, I am excited about the opportunity ahead. We are greeted with what looks like another opportunity in XOP among other ETFs. I reluctantly did not place any trades today, although I was tempted to place a trade at the closing bell. So, hopefully we see a relatively flat open so I can make a few … [Read more...]

Keeping it short tonight…High-Probability, Mean-Reversion Indicator

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More Downside to Come?

Just a quick post tonight...absolutely exhausted. As a famous man from L.A. once said, "today was a good day". XOP was down over 2.5% today, so I decided to lock in profits on our XOP puts. I hope some of you were able to take advantage. The pullback also helped out our credit spreads in SPY. And best of all, the pullback has given us the opportunity to add a few more positions. I really like FXI, USO, and TBT right now and even XOP still intrigues me. I will short the latter with puts again if it manages to bounce higher over the next few days. But all of these offer good opportunities to sell some premium. Indeed, the risk/reward is very high for those willing to take on bearish strategies. Subscribers stay tuned for … [Read more...]

The Time is Now

After completing my daily routine of updating the short-term oversold/overbought list of highly-liquid ETFs for the High-Probability, Mean-Reversion indicator I can't help, but to be excited for the days ahead. Of course, I'm talking short-term, but I think this extends through the November and December expiration cycles as well for those of us who like to sell options. But if you like to play the directional game, which I do once in a while, you can't ask for a better time. Indeed, the God of Probability is smiling right now. Just look at all of the short-term extremes in the market right now. Take your pic. The fact, that all but volatility is in a short-term extremes tells us a mean-reversion is likely. Historically, when we see … [Read more...]

Building Momentum…Another Good Expiration Cycle

Despite the surprising rally over the past week or so, all of our bear call spreads are going to close out the cycle worthless. And as most of us know, in the world of an options seller worthless is a wonderful thing. We only had a few spreads on during the month of October, but both made 17.6% for the cycle. As I've been saying over the past several days, I want to add a spread or two for the November cycle but I wanted to wait until the BS in Washington passed. And now that the buffoonery has passed, I'm happy to say we've been left with a great opportunity. Just look at the overbought/oversold indicator below. Almost everything is in an overbought state on a short-term basis. And even though volatility has been crushed (as seen in … [Read more...]

What to Look for Post-Government Shutdown

Now that we are past the government nonsense, at least for now, we can finally get back to business. As I stated yesterday, we've been patiently sitting on the sidelines for obvious reasons, but now that two out of three of our current positions are due to expire Friday, we need to start logically seeking for November premium. And thanks to our friends in the government and I'm not being sarcastic, we've been left with a VIX that currently trades around 15. It's certainly not the 18 it was trading just a few days ago, but it is far better than the 12-13 that we witnessed during the beginning of the year. Anyway, subscribers stay tuned for a few trade alerts over the coming days. If you are a believer in a statistical approach … [Read more...]