July 24, 2014

Focusing on Energy (XLE) and Silver (SLV)

6-23-2014 9-42-30 PM

Even with the market steadily moving higher, I'm still not backing down from what got me here. Yes, the market can continue to rise, but at what rate? The odds are leaning towards a short-term reprieve and as options sellers that is what we use to make our decisions. No guessing here. Yes, we will be wrong on occasion, but the probabilities always work themselves out over the long-term. I'm focusing on Energy (XLE) and Silver (SLV) at the moment. Both ETFs are in an extreme short-term overbought state, so per our strategy we will go in and start selling a few bear call spreads, typically with an 80-85% probability of success. My guess is that tomorrow will bring a few more trades for either the July or August expiration. Subscribers … [Read more...]

Adding More Positions After a Rough Expiration Cycle

High-Probability Options Strategy

Well, it was a rough expiration for those of us who sell options. Unless you are a far out-of-the-money put seller, it was a difficult month to sell options. With volatility at seven year lows, options premium among the indexes, especially the S&P 500, is hard to come by. So, we took a few lumps during this cycle. It happens. Nothing to hide here. Transparency is part of the process. In fact, we should expect to see months like these on occasion. Because even though we use high-probability options strategies with typically an 80-85% chance of success, there is always the opposing 15-20% that will win. Believe me, over the long-haul, the probabilities will play out. Just like a coin toss. Ten flips can have a wide variance. … [Read more...]

Still Teetering on the Edge

6-16-2014

We are still seeing extremes in the market, so the bulls are not out of the woods yet, at least over the short-term. Seasonally speaking, the latter part of June (starting tomorrow) is historically very weak. In fact, it is one of the weakest periods of the year. My hope of course is to see the history repeat itself so we can take off our three June positions for a nice profit. We've been on quite a run for over a year and we want to make sure we keep those profits going forward. If you are a believer in a statistical approach towards investing please do not hesitate to try my options strategies. I use simple mean-reversion coupled with probabilities for each and every trade. Give it a try, it’s free for 30 days. If you … [Read more...]

The Grind Higher Continues…

High-Probability, Mean-Reversion Options Strategy

Nothing has managed to stop the grind higher over the past month or so. In fact, according to Jason Goepfert of sentimentrader.com, "the S&P 500 has gone 37 trading days without a 1% daily change. the second longest streak in 15 years. Couple, the aforementioned with a plethora of other extremes in the market and I think you know where I am going. As you can see below, most of the ETFs we follow are in an extreme state. Typically, when we see these types of extremes a short-term reprieve is to follow....trade accordingly.   If you are a believer in a statistical approach towards investing please do not hesitate to try my options strategies. I use simple mean-reversion coupled with probabilities for each and every … [Read more...]

Up, Up and Overbought….Historic Extremes

high-Probability, mean-reversion options strategy

I haven't seen this many extremes in years, especially the "very overbought" state in all of the major market benchmarks. It's time to put on some more credit spreads, just be careful because implied volatility is historically low.   If you are a believer in a statistical approach towards investing please do not hesitate to try my options strategies. I use simple mean-reversion coupled with probabilities for each and every trade. Give it a try, it’s free for 30 days. If you haven’t had a chance,  please join my Free Weekly Newsletter, Twitter feed and/or Facebook page. Also, due to the enormous amount of requests over the past week I have decided to keep my annual deal available for several more … [Read more...]