June 25, 2017

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...]

Options Strategies Continue To Shine In This Volatile Market

I am going to keep it rather short tonight. The market moved lower today, but the bears had a rough time pushing the major benchmarks decisively lower. We could still see a push lower, but over the short-term the direction leans towards the bulls. However, there are a few international ETF's that have pushed into an oversold state and a few could be potential plays going forward. Currently EWZ, EWP and TBT are on my radar for short-term plays and as always I will inform all of you (my paid subscribers) in real-time if and when a trade occurs. New Credit Spread Options Strategy – Beta The two week push by the bulls has pushed the value of my credit spread to approximately $.51 which is $.17 higher than my original price. For all … [Read more...]

Small Caps (IWM) Hit Short-term Overbought Extreme – Potential Trade Ahead

New Credit Spread Options Strategy - Beta The window dressing that typically occurs during quarters end is in full effect. The Russell 2000 (IWM) has charged higher over the past four trading days and yet the 86/88 IWM put vertical that I sold is still well-positioned. At $82.90, IWM is still roughly 3.6 percent away from the short strike. I like this scenario. IWM has moved into an extreme overbought state and as a result I will most likely place a trade in the High-Probability, Mean-Reversion strategy tomorrow. IWM or another high-beta ETF will be the underlying of choice, if indeed a trade occurs. This should bring the IWM credit spread back to break-even with the potential of making some nice gains if a trade occurs and IWM … [Read more...]

Potential Options Trade – Short-term Overbought

Market Mumbo Jumbo The market moved higher today and pushed a few of the sector ETFs near a short-term overbought extreme. According to Jason Goepfert of Sentimentrader, "Tuesdays are good "bottoming" days, and June is a good bottoming month.  The 14th and 15th trading days of the month are also higher-probability days for a low". Moreover, the week after June option expiration has been negative 72 percent of the time since the inception of the S&P 500 futures.  Every one of the past 6 years has been negative during this week. As the market moves ever closer to a short-term overbought I expect another test of the recent lows in SPY. A gap higher at the open in SPY and I will most likely take the first position of the month in … [Read more...]

Options Indicator in a Neutral State – Remember, Patience is the Key to Any Successful Options Strategy.

No trade today - the risk/reward is just too high at the moment. I would rather sit patiently on the sidelines for a better set-up to come my way. This is how to successfully play the options market or any market for that matter. Any trader with staying power will quickly tell you that patience is imperative when trading, particularly when trading options. My true focus and the focus of my options strategy is to find extremes in the market. Lately the major benchmarks and the sectors I follow just want to sit in a neutral state. That is fine, extremes will hit the market as they always do and I will be waiting patiently to jump on those opportunities when the arise. Remember, patience is the key for long-term success in options … [Read more...]

Short-Term, High-Probability, Mean-Reversion Indicator

Here are the current readings for the High-Probability, Mean-Reversion Indicator. Oh yeah, if you haven't noticed the table is slightly different. I would love to know what you guys/girls think. Any feedback would be greatly appreciated. Also if you have any suggestions for ETFs that you would like to see on the list let me know. Just know that the bid-ask spread must be reasonable or i just isn't worth following because an options trade would not make sense when using the strategy. Liquidity is key. … [Read more...]