August 18, 2017

Volatility is Back…So Are We…

We're back. Or better said, it's back. That's right...our old friend Mr. Volatility has once again made an appearance. Just look at the chart below.   For those of you who have no idea what I'm talking about the VIX, or implied volatility is back above historic lows. After much research, we know when the VIX reaches 13 or below selling options in the major indices is typically a bad idea. Basically, the VIX below 13 is an options sellers kryptonite...that is if you are selling options on SPY, SPX and a few other highly-liquid underlyings. But the VIX is once again back above a tradeable level so let the selling begin. Over the course of the next week I plan on selling options on SPY and SPX using credit spreads and … [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...]

The Grind Higher Continues…

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

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 days. Thanks again for … [Read more...]

It’s Time to Sell Some Options

Up, up and away!!! Get ready for a move...and make sure you take advantage by SELLING some options. Bear calls, condors and puts, oh my... Tomorrow should be a busy one. Enjoy! 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 days. Thanks again for all of the support. … [Read more...]

Straight Up Indicator

Not much to report tonight. Absolutely noting has changed from yesterday. The grind higher has pushed many of the ETFs we follow into an extreme overbought state. You know what that means...bear call spreads. With roughly 44 days left, selling options for the July expiration cycle looks like the move. Subscribers 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 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 … [Read more...]

Grinding, Grinding, Grinding Higher

The market continues the slog higher. But I think we all know how this ends, right? We might not see a push lower for long, but the pullback is coming. The sectors that have led the short-term push higher are all in an overbought state now, which means it is a great time to start selling some bear call spreads. I was willing to sell vertical call spreads last week, so why wouldn't I like them even better here? The only problem is implied volatility. As many of you already know, volatility has reached a historic low which means options prices, thereby premium, is also low. However, that does not mean that opportunities aren't abound. You just need to search a little harder to find meaningful trades. You can start with the table … [Read more...]

Potential Bull Put Spread Gold (GLD, GDX, NUGT, DUST)

Volatility continues to amaze me. We continue to witness historic lows almost every day. Last week I even added a bull put spread in UVXY to take advantage of the short-term "very oversold" state. So far, it hasn't worked out, but as subscribers know, UVXY is still trading comfortably  above our short strike. Gold and all its variations are also on my radar.  All four ETFs offer some interesting options plays. Of course, my favorite, particularly for those with smaller accounts are credit spreads, more specifically, bull put spreads. As most of you already when a highly-liquid ETF reaches a short-term extreme (as indicated by the chart below) I like to use a high-probability trade to take advantage using various credit spreads, like … [Read more...]

Bull Put Spread in UVXY

We're starting to see overbought readings hit in several of the major indices and international ETFs. My only hesitation at this juncture is the incredibly low volatility in the market. As I stated a few days ago, options premium has reached an 8 year low. the VIX is hovering around 12 and VXX and UVXY are in an extreme oversold state. As a result,  I had to take advantage of the "very oversold" reading in volatility today by placing in UVXY using a bull put spread. The set-up was just too perfect to pass up. And while the trade might be a success (no trade is guaranteed) I could not ask for a better set up and entry. We will see soon enough how this one turns out. If you are a believer in a statistical approach towards investing … [Read more...]