June 23, 2017

Gap Fade Options Strategy and Signal Nearing for New Sector ETF Extremes Options Strategy

The NASDAQ 100 (QQQQ) opened lower today for a gap lower. However, the gap was only $.21, which in most cases is a borderline signal. Had QQQQ been in a short-term oversold state a signal would have been triggered, but with the tech-heavy index firmly in a neutral state and the gap only $.20 a signal was not triggered and the strategy was better for it as we were able to avoid a loss for the trade. The risk/reward just isn't high enough when the gap is only $.20 while QQQQ is in a neutral state. I typically purchase an in-the-money option with a delta between .50 and .65 and when taking the bid/ask spread penalty in to account a gap close on a gap like today would have limited gains. As I said the strategy avoided a loss and who knows we … [Read more...]

Underlying ETF Options Still In A Neutal State

The NASDAQ 100 (QQQQ) Gap Fade options strategy was extremely close to a signal at the open this morning, but unfortunately, QQQQ opened slightly below yesterday's high. The last few trading days have been close calls for the the Gap Fade strategy as QQQQ has closed near session lows and highs. Today was no different as QQQQ closed near the session lows at $48.54, with the low being $48.47 so a lower open tomorrow coutld trigger a signal if the initial decline is deep enough to warrant a good risk/reward and therefore a trade. Subscribers to the strategy, as always, will receive a real-time trade alert when and if one occurs. As for the rest of you, well, I will inform you here (at the daily options blog) of any trade and the … [Read more...]