April 25, 2014

Strategies

 High-Probability, Mean-Reversion Strategies

6 High-Probability, Mean-Reversion Strategy 

An options-selling strategy that uses my proprietary High-Probability, Mean-Reversion Indicator to take advantage of short-to-intermediate-term overbought/oversold extremes in the major market ETFs (SPY, IWM, QQQ, DIA) .

As with all of my strategies, it is statistically-driven.

The statistically-driven strategy requires patience coupled with a disciplined approach.  The strategy will provide on average 2 to 5 alerts  a month in the most highly-liquid major market benchmark ETFs (SPY, IWM, QQQ, DIA). The key to this strategy is patience. Waiting for the appropriate scenario with a high probability of success  is what makes this strategy a success. This is our most conservative strategy.

There are many great aspects about this probability-driven strategy. You are able to choose your own probability of success, your risk is defined and best of all you don’t have to be right in your directional assumption on the trade. Yes, you can make money even if the stock moves slightly higher, lower or trades in a sideways fashion.

 

6 Theta-Driver Options Strategy

My favorite strategy! The Theta-Driver Strategy follows the 30-40 highly-liquid ETFs I follow in  the High-Probability, Mean-Reversion indicator . Once an extreme is hit, I then implement an appropriate credit spread strategy (typically iron condors) with a high-probability of success. At order entry, my typical trade starts with an 85-90% chance of success. I use various credit spreads within the strategy including vertical put and call spread, iron condors, etc to sell premium for monthly income.

The statistically-driven strategy requires patience coupled with a disciplined approach.  The strategy will provide on average 2 to 5 alerts  a month in the 30 ETFs I follow plus the occasional highly-liquid stock. Like my other strategies, the key to the Theta Driver strategy is patience. Waiting for the appropriate scenario with a high probability of success  is what makes this strategy a success.

I post the High-Probability, Mean-Reversion Indicator each and every trading day in my Options Blog.

There are many great aspects about a probability-driven strategy. You are able to choose your own probability of success, your risk is defined and best of all you don’t have to be right in your directional assumption on the trade. Yes, you can make money even if the stock moves slightly higher, lower or trades in a sideways fashion.

6 High-Probability, Mean-Reversion Short-Term Directional Strategy

Sounds complicated? It isn’t. This is a simple strategy that takes advantage of very extreme readings among the 30-40 most highly-liquid ETFs I follow. Unlike the other two strategies I actually buy calls and puts for short-term trades. Directional trades don’t happen often because they are only used in the most extreme short-term situations.

 

 

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