April 28, 2017

The Return of Volatility?

After hovering around 11-12 since early June, volatility, as seen through the VIX, is finally making it's way back above 13. Of course, there have been a handful of teasers over the past several weeks so the move today is certainly not definitive, but it's worth keeping a close eye on. As options sellers, particularly those of us who like to sell options premium on the major market benchmarks like the S&P 500, an implied volatility below 13 just isn't viable. However, above 13 and we are back in business. Of course, I would prefer to see something in the range of 18-25, even as high as 35, but we will take what we can get at the moment. As for individual ETFs, FXE looks the most interesting. And of course, Apple (AAPL) continues to … [Read more...]

High-Probability Mean-Reversion Options Indicator

Nothing fancy here. Just the daily indicator. I'm really going to try and keep this updated daily. If it means no associated, then so be it. You've spoken and hopefully I've answered. Enjoy! … [Read more...]

Focusing on Energy (XLE) and Silver (SLV)

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

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

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...]