January 31, 2015

Up, Down, Up, Down…What’s Next?

1-27-2015 9-56-02 PM

The market took a tumble today and my guess is there is more to come going forward. Although, as an options trader, the direction of the market doesn't really matter too much. As an options trader who focuses on options selling strategies, it's all about the volatility. As long as implied volatility for SPY stays above the historical average all is well in the land of high-probability options strategies. I've started off the year with several successful trades, but admittedly the trades have been few and far between. That's about to change. Stay tuned!!! 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 … [Read more...]

Welcome to the New Year…It’s Going to Be a Good One

As an options trader, I don't really concern myself too much with the directional tendencies of the market. Yes, I will have my occasional bias, but the bias is based on short-term overbought/oversold levels, better known as mean-reversion in the world of statistics. And once I have my so-called directional leaning I most often wrap a high-probability strategy around my bias using options. These simple steps are the foundation of almost everything I do as an options trader. And while these steps give me an edge, if used in the right manner, they still do not guarantee profits at each and every turn.But when you have the ability to take all emotion out of the equation and limit yourself to simple mechanics you are well on our way to becoming … [Read more...]

Trade Alert (open) 12-22-14

Here are most likely the last two trades of the year. It’s been rather slow over the past few months which is why I will be introducing five new portfolios at the onset of 2015. Stay tuned for what will be a huge new offering for all of you and one that I think all of you will thoroughly enjoy. Have a wonderful and safe holiday season!!! SPY Credit Spread Please pay attention to the OPRA or options code. These are options with 10 days left until expiration. Simultaneously: Sell to open the SPY January 2014 212 calls (SPY150117C212) Buy to open the SPY January 2014 214 calls (SPY150117C214) for roughly an $0.34 credit Do not accept less than $0.30 credit to enter this trade. Enter this trade as a spread to avoid … [Read more...]

One Anomaly After Another

It’s been a while since my last post. In fact, it’s been exactly one month. During that time I received the following email from a long-standing subscriber: I'm sure that you don't need reinforcement for your strategies, but the following summary of SPY by Tom Sosnoff pretty much echoes your take on the current situation. Since October expiration, yesterday’s rally in the SPY marked 12 out of 16 days it’s gone up. Assuming that there’s a 50/50 chance that the SPY will go up or down on a given day, there’s about a 2.78% probability of having only 4 down days out of 16. And it’s unlikely even if you don’t believe that the probability is exactly 50/50. If that weren’t unlikely enough, the SPY is up over 8% since … [Read more...]

Trade Alert: 10-14-2014

First of all, I hope several of you held on to our old DIA puts position. While we made a nice gain on the trade, had we held the gains would have been tremendous. As most of you know, I’m a probability hound so I rarely buy options. But, the opportunity for a quick scalp looked too good to pass up. So, I decided to buy the Nov. 173 puts for $3.50 and a few days later we sold them for $4.50. The 28.6% gain was nice, but the puts are now worth $9.80. We currently have three open positions and all are in profitable territory. October expiration is Friday and our Apple 108.57/106.43 bear call spread and DIA 176/175 bear call spread are both essentially worthless. Some of you might prefer to hold both of the spreads through … [Read more...]