July 28, 2017

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...]

Options, Options and More Options

Note: Friday's  High-Probability, Mean-Reversion Indicator will now be published in the free Weekly Options Report so I hope that all of you take advantage and sign-up. I am truly excited about adding a few more options strategies to the mix. I have been waiting to add a few more strategies to the mix and hope that you find them valuable additions to the options newletter. I will be using various forms of credit spreads within the strategy so stay tuned to the blog over the next few weeks. I will be posting my trades here on the blog so that all of you have a grasp as to what the options strategy entails. We can use the comments section at the bottom of each post for questions, comments, etc.. Anyway, I hope all of you have a … [Read more...]

High-Probability, Mean Reversion Options Portfolio Up Another 7.2% in May

High-Probability, Mean-Reversion Options Strategy Update We only have a few trading days left in the month of May. The High-Probability, Mean-Reversion Options Strategy is up 7.2% for the month while the S&P 500 (NYSE: SPY) is down $0.64 or -0.48% in May. The month follows a stellar 10.5% gain in April. So far, the strategy is up a respectable 40.2%  since its inception back in November. What I like the most is that the returns are based on only 13 options trades. When compared to other options strategies on Collective2, the High-Probability, Mean-Reversion strategy outperforms on every measure and we are only in the market an average of roughly 8 days a week with an average of 2 trades a month. You can see all of the … [Read more...]

Options Strategy Advances – Up 40.2% Since Inception

Yesterday, I mentioned the potential for a trade in one of the major benchmark ETFs. The trade became a reality this morning after I took a position in the Nasdaq 100 (QQQ) shortly after the opening bell. You can see all of the trades and how the strategy has performed here. I was able to buy QQQ Sep11 56 calls for $2.71 and sold the calls almost near the high of the day at $2.88. Not the biggest return by any means, but it did amount to a respectable 6.3 percent return on the trade. It was enough to push the overall return of the strategy 3 percent to 40.2 percent. The win ratio is an astounding 93.3 percent (hard to believe I know) and the Sharpe ratio is 1.63. I would imagine that once the statistics are updated on my third-party … [Read more...]

Options Trade Imminent

An options trade is imminent. The High-Probability, Mean-Reversion strategy is showing short-term extremes in all of the major benchmarks and the RSI (2) is confirming with my proprietary indicators. With that being said, I would expect to see a trade in one or more of the major market ETFs tomorrow. I have been getting a lot of requests to follow other ETFs in the strategy. While I would absolutely love to increase the number of ETFs on the list, the liquidity in the ETFs requested do not meet my requirements. If the options liquidity is too low, the bid/ask spread in the underlying ETF is too wide. For example, if we have an option that displays a bid/ask spread of $2.00 - $2.50 then the market maker is essentially buying an … [Read more...]

S&P Moves Ever Closer to Closing 4/20 Gap and “The Option Strategy”

The S&P 500 (SPY) pushed lower today to come ever closer to closing the gap from 4/20. SPY moved fell to a low of $132.12 before bouncing to close the day over $1 higher at $133.17. It would take a move to $131.35 for the gap to officially close. My stance is that we shall see a series of gaps close this summer beginning with the 4/20 gap, followed by the 12/1/10 gap at $118.01 with the potential of a close of the 9/1/10 gap at $104.41 the bears truly take control. I do not expect the latter gap to close this summer, but it would not surprise me to see the gap close over the next 12 months. For me, it truly doesn't matter. I enjoy speculating (like everyone else) where the market is going to go, but no one really knows. I do not … [Read more...]

Commodities Due for a Short-Term Bounce

I am sure that most of you were privy to sharp decline in the commodities sector. Silver led the way with the iShares Silver Trust Fund (NYSE: SLV) losing 31.1% of its value in five trading sessions. The decline was sharp and aggressive sold. Sellers came out in full force, but now I would not be surprised to see a short-term bounce before the selling resumes. However, I will not try to catch a falling knife with this one. The RSI (2) for silver (SLV) stands at 18.8, not even close to trigger a signal in my proprietary trading strategy. Although, I do have my eye on two ETFs for early next week. The Oil Services (OIH) and Peru (EPU). Both have taken tumbles as of late and are nearing an area of entry. If one or both open up lower Monday … [Read more...]

Short-Term, High-Probability, Mean-Reversion Indicator – TBT Moves Into An Extreme State.

It has been a strange few weeks in the market. We had several trading days of strong resistance in the S&P 500 (SPY) and have basically sold off since the beginning of earnings season. Is it me, or does the market almost seems too predictable at the moment. Will the market truly be this simple to predict over the coming months? I am certainly not claiming to have the magic crystal ball, but at the moment the market just feels heavy and tired. With the old Wall Street adage about to grace us with its seasonal presence, I feel like we have seen the highs for a while. I expect to see a decent decline during the summer doldrums, which I think will offer a very good buying opportunity over the long-term. We could see a few gaps … [Read more...]

Short-Term High-Probability, Mean Reversion Indicator- Major Benchmarks Hit Short-Term Extreme

First of all I would like to thank all of you for your patience over the past week. I decided to take a brief hiatus from my daily writing, but that does not mean that my trading ceased. I actually placed a trade in the High-Probability, Mean-Reversion strategy last week and hopefully I will have some positive news to report early next week. Anyway..... All of the major indices have moved into a short-term “very overbought” state. More often than not, this type of reading signals a short-term reprieve in the market. There are still unclosed gaps from 2/1 and more recently 2/7. I would expect both gaps to close as we move towards the bearish portion of February – the second worst performing month for the market. Another short-term … [Read more...]

S&P (SPY) Heading South? How Far?

As I write this the S&P 500 (SPY) is down $1.28 or 1.1%.  Since 9/20 the S&P has been testing the $115.0 level and has failed to push through and sustain the area strong overhead resistance. Moreover, the S&P has broken the low of the tight trading range that the major market benchmark trading in last week. Is the gap from 9/13 near? A move down to the $111.02 would close the gap and I would close the majority of  My Options Portfolio's month-long SPY puts off the table. Click chart to make larger. According to Jason Goepfert of the Sentimentrader.com, the so-called "smart money", has recently established the largest net position on record by an enormous amount. In the past, the market has waned when these traders have … [Read more...]