June 27, 2017

The Fight is On — Which Way Will the Russell Turn?

All of the major benchmarks are back in a neutral state...but for how long? But, if we look at our shorter-term readings (not shown here) most of the benchmarks are in a very oversold state so a push higher over the next day or should not be unexpected. However, don't forget the huge gap up that has yet to close in almost every ETF we follow. I expect we will see the close of the gap before March expiration arrives. As for the small-caps, the Russell 2000 ETF is hovering around its upward trendline from late 2012. It dipped below $118.50 today and if it manages to stay below those levels we could see a new overhead resistance form. My positions certainly would enjoy a reprieve over the short-term. If you are a believer in a … [Read more...]

My Short-Term Market View Hasn’t Changed

My view hasn't changed since the middle of October. ...this market is set-up for a nice decline. And so far, while my view hasn't been realized, the market hasn't rallied further. In fact, the tight trading range at all-time highs has proven to be an excellent area to sell credit spreads. Moreover, I think the major benchmarks could be trading at levels that offer a  wonderful opportunity to take a few short-term aggressive plays like buy a few puts. I typically, don't buy options, but at these levels it's hard to pass up...and we've actually had very good fortune buying puts over the past month. So, if you are a subscriber, stay tuned because there is a very good chance that I will be adding to our December positions … [Read more...]

Inching Higher and Higher

I'm keeping it short tonight. The market pushed ever higher today, but I'm not so sure the bulls can call it a victory just yet. Yes, we are watching lifetime highs in the IWM, but we are also hitting short-term overbought readings with an enormous unclosed gap underneath...a recipe for bearish success. I still think we close the gap which would take us back down to the $165 level on SPY. But, I'm not stepping out in front of this train just yet. I have several positions well on their way to expiring worthless which means a max profit is coming our way. But again, until the debacle passes I really am hesitant to add a risk-defined position even though everything tells me we are in the latter stages of this short-term … [Read more...]

High-Probability, Mean-Reversion Indicator

I'm adding a new ETF to the mix...Homebuilders (XHB). This one looks ripe for the picking. Highly-Liquid. Implied volatility (IV) has spiked and the ETF is in a "very oversold" state on a short-term basis. Bull put spread? Straight call? Both? Subscribers stay tuned! If you are a believer in a statistical approach towards investing please do not hesitate to try my options strategies. I use simple mean-reversion coupled with probabilities for each and every trade. Give it a try, it’s free for 30 days. If you haven’t, join my Twitter feed or Facebook. Kindest, Andy … [Read more...]

Just One More Reason to Use Credit Spreads

The VIX closed above 20, just shy of the year-to-date high. Not even three weeks ago the volatility, known by some as the "fear index", was trading around 12.50...roughly 60% lower. Indeed, fear is back in the markets. How long will it last? Who knows, but while the stalemate in D.C. continues we, as options sellers, are rejoicing. As most investors begin to squirm options sellers become wide-eyed with glee. Because, as volatility increases options prices increase. But I want to keep things simple today, so I'm not going into a full blown post on one of the main components of the options pricing model...implied volatility. Until then I want to go over how I am approaching this market in very simple term. I will have a few … [Read more...]

High-Probability, Mean-Reversion Indicator

If you are a believer in a statistical approach towards investing please do not hesitate to try my options strategies. I use simple mean-reversion coupled with probabilities for each and every trade. Give it a try, it’s free for 30 days. If you haven’t, join my Twitter feed or Facebook. Kindest, Andy … [Read more...]

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...]

Strategies Excel During “Sell in May”…Here’s Why…

April expiration has finally passed. And it was a good one for our options strategies. All three strategies reaped profits. Again, the goal is to produce as much income as possible each and every expiration cycle. But, keeping risk-defined is the key to any successful long-term approach, so expectations should always be reasonable. No speculation...just high-probability strategies that hit lots of singles and doubles. The occasional home run happens, but it's an anomaly. Anyway...the expiration cycle witnessed a wide-range of short-term sentiment. Mid-way through the cycle most of the major indices were hitting all-time highs. But, as we have all witnessed over the past several week the bulls reign is over. Now all of the major … [Read more...]

Can the Dow (DIA) Continue at this Pace?

I think the answer is obvious. The Dow pushed higher for the 10th consecutive trading day. The Dow hasn't seen a streak like this in over 17 years. Three months into the year, the Dow has shot up nearly 11 percent while the S&P 500 has gained 9.6 percent.                                     For those of you familiar with the normal distribution model, the Dow is on now firmly entrenched in the  tail portion of the curve. Basically, when we see a streak like what we are currently witnessing in the major market indices a correction is not far behind. Think about it for a second. The … [Read more...]

Has the Reversal Started?

Important Note to Subscribers: Before I begin I wanted to remind those of you with SPY positions that ex-dividend is on Friday the 15th. It is imperative that if you have any ITM strikes you must take off that position unless you want to be on the hook for the dividend. I will be sending out a trade alert Thursday (possibly tomorrow if SPY moves lower) to remind my subscribers to take the appropriate steps if they indeed have any ITM strikes. The S&P 500 finally took a reprieve today after seven straight days of gains. SPY traded as low as $155.22, but finished the day back up towards the $155.70 level...indeed frustrating for those of us with bear call spreads. But again, it's all about staying the course. And given the current … [Read more...]