August 20, 2017

The Reprieve is Here…But for How Long?

A Few Random Thoughts Last week we were witness to some of the most short-term overbought conditions seen all year. Now, post fed-taper, what should we expect to see? Well, for starters the week following options expiration, particularly triple witching, is historically bearish. Couple that with the unclosed gap in the S&P 500 (SPY) from 9/10 and I anticipate we will see $167.73 sooner than later. We worked off the overbought conditions in most of the major ETFs and actually closed the first gap from 9/16 today. Now we patiently wait for the other shoe to fall. All of our positions established last week are in great condition. Moreover, we might have the opportunity to sell more credit spreads to turn our verticals to iron … [Read more...]

On the Eve of Options Expiration…..

I am always amazed how large the opportunity to “make it big” factors into the great magnetism of the market. The belief that anyone, from any background can be successful and make tons of money has quite the allure. But, in all of this euphoria people neglect to think about all of those that failed before them. And believe me the failure rate is high. Yet, investors/traders continue to choose the most difficult of investments to trade – stocks. Stock-only traders are at a complete disadvantage because they have no way to trade the randomness of the market. They have a 50/50 chance of success for each and every trade. Bottom line – stock investors/traders are truly at a disadvantage. Again, stock investors only have two ways to make a … [Read more...]

Options Trades in the High-Probability, Mean-Reversion Strategies

A trade in the High-Probability, Mean Reversion Strategy looks likely if IWM happens to open flat or open tomorrow. Of course, there are a few other thng is that need to line-up, but the first trade of a slow August seems likely. Subscribers stay tuned! Our latest Theta Driver Options trade looks very good. Last Monday, I placed our first trade for a credit of $0.25 and thanks to some help from the bears (although a flat to slightly higher market would have worked as well, just not so quickly) the credit spread is now worth less than $0.05. With only $0.05 and 25 days left until September expiration I will mostly likely lock in the gain for roughly a 9% gain (including commissions) and place another Theta Driver trade within the next few … [Read more...]

Triple Witching – Potential Credit Spread Tomorrow

Market Mumbo Jumbo It has been an interesting options expiration week. The S&P 500 (NYSE: SPY) has lost a total of $0.30 since the close last week - a paltry decline.  However, this did not stop Mr. Volatility from finally making an appearance. Options traders, particularly those of us who sell options premium, can finally rejoice. Options premium has finally moved back into this market. Now if the VIX could just hold 20 and move as high as 35 I would be one happy option trader. With that being said, I look to place a position at some point tomorrow in the my new credit spread strategy. Stay tuned! Options Indicator – Overbought – Oversold Every ETF that I follow basically stay within a short-term neutral state today so I … [Read more...]

Post Options Expiration Fallout?

After the best advance since 1939, the market has continued its trod higher right into the middle of October and most importantly, options expiration. As expected the advance has once again, pushed the many of the ETFs I trade into a short-term "overbought" state (mentioned in subscribers' weekly report). Historically, the trading session (and the week for that matter) following options expiration is overwhelmingly bearish. The odds increase dramatically when the market is in an overbought state. This means that since the market held up this past week (as it usually does pre-expiration) the probability of a move lower on Monday increases substantially. I currently have an SPY and TZA positions and will be looking at FXE … [Read more...]