July 26, 2017

Archives for April 2015

Options Traders Have the Advantage

As options traders we have the advantage over other investors. Why? Because with each and every trade we have the opportunity to structure positions that can generate profits regardless of market direction. In fact, strategies like iron condors perform perform best when our underlying of choice moves sideways during our stated expiration cycle. More importantly, we have the ability to choose our own probability of success and the only way to do that is through selling options. Selling options is a far superior strategy to buying options. So why do so many people choose to buy options? Why is the strategy of buying options so prevalent in the world of options. Is it because they are easy to understand? Probably...they act just like … [Read more...]

A Brief History of the Efficient Market Theory

For those of us who believe in a statistical approach to the market, Random Walk and more specifically, the Efficient Market Theory act as the foundation for our approach. For those of you who want to learn the beginnings of Efficient Market Theory check out the what "father of modern finance", American economist and Nobel laureate in Economics, Eugene Fama has to say. Fast forward to the around the 6:30 minute mark to hear what Gene has to say. An interesting listen for all the finance and investment geeks out there. Enjoy!   … [Read more...]

April Expiration Cycle is Behind Us

The Brazil ETF (EWZ) is the only underlying in an extreme state at the moment. We do have a few other highly-liquid ETFs entering into overbought/oversold territory, but nothing to trigger a trade. Again, EWZ is the only security currently in a short-term extreme. The implied volatility in EWZ is actually above 30%, so the ETF offers an interesting play at the moment and one that I might be making early next week in the Premium Seeker Portfolio. I recently introduced three new portfolios based on the key concepts I've based my trading on for years - probabilities, mean-reversion and proper risk-management. My approach hasn't changed at all. I just thought it was time to offer my subscribers more in the way of statistically-based … [Read more...]