May 22, 2017

The Right (and Wrong) Way to Approach Options Trading

I just want to start off with a few random thoughts. Enjoy the post and as always, please do not hesitate to email me with any questions or comments.  September expiration has finally passed us by. It was a rather smooth month until Helicopter Ben stepped in this past Wednesday. Of course, the bulls were certainly more than ecstatic about the results. But, the move was short-lived and as we enter post triple witching we should expect to see further declines. On second thought, Ben's message might have been one of the best things to happen to the bears in quite some time. Couple the aforementioned with the fact that we are witnessing record inflows into funds and you start to get the sense that the bears might have a turn … [Read more...]

The Perfect Environment for Selling Options Premium

Let the selling continue - the selling of options premium. Implied volatility remains high as the market remains anxious about the next piece of news. You can thank the Eurozone for the heightened VIX. At 30, the investor's fear gauge affords sellers of options premium the opportunity to create spreads with incredibly high (by historical standards) premium. Premium affords investors/traders the ability to increase the risk/reward of their respective trade in various ways and I am a high-probability trader in every sense of the term. So as one could expect, this environment lends well to my Theta Driver strategy . I sell premium, mostly through out-of-the-money vertical bear calls and vertical bull puts, but more importantly the trades … [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...]