August 20, 2017

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...]

Short-Term Reprieve Occurs – Now What?

In my Free Weekly Report this past weekend I spoke about how I thought a short-term reprieve was lurking. I spoke about a return to 1220 and well, we are here already. Now what? The market gapped significantly lower at the open and never looked back. Now all of the ETFs I follow for the options strategies are well within a neutral state. The only ETF that has pushed into a short-term oversold state - TBT. And if the RSI (2) of TBT moves even lower tomorrow I will most likely take another position. Other than that I will be sitting on the sidelines waiting for the next set-up. According to Jason Goepfert: "The Beta Chase Index jumped above 6 on Monday, very unusual for a down day in the market. Part of the reason was that … [Read more...]

Back in a Neutral State. Where Now?

The market moved decisively lower today and while most think it was just a normal decline I think there could be more ahead. Tim Knight of Slope of Hope recently stated that he thought the 1223 area on the /ES would act as a strong area of support and I think he is correct in his assumption. If we break that area then I would expect to see a decisive decline as we head into December. The true test will be once the market reaches its next short-term oversold state. If the bounce is violent then, yes, I would expect to see another push higher into November expiration. But, if the the bounce is weak, then bears should have good reason to rejoice as another swift decline could be in order. If you haven’t already, don’t forget to sign-up for … [Read more...]

Major Benchmarks in a Short-Term Overbought State

I am keeping it very short tonight as I am just not feeling up to snuff. My effort to eliminate caffeine from my daily regimen is taking its toll tonight, but hopefully this pounding headache is short-lived. Anyway.... The market has pushed into another short-term overbought state and as a result I placed a trade in the High-Probability, Mean-Reversion strategy. I still have two prior trades on, so this is the third open trade in the strategy. My hope is that the market takes a reprieve from the short-term overbought state over the next week so I can close all three positions. I will you with this tasty nugget from Sentimentrader.com's own Jason Goepfert:  "We mentioned last week that the Monday after October option expiration … [Read more...]

Options Indicator Signals Tech Overbought

Here's the list of the ETFs that make up the High-Probability, Mean-Reversion Options Indicator. Hopefully (time permitting), I will be back with another post later this evening. Stay tuned! If you haven’t already, don’t forget to sign-up for my : High-Probability, Mean-Reversion Options Strategy : Free 30-day trial Theta Driver Options Strategy (limited room available): Free 30-day trial Also, for those of you who live on Facebook. You can access my info there as well. Just click on LIKE. … [Read more...]

High-Probability, Mean-Reversion Indicator – Short-Term Reprieve Looks Imminent

It was another day of sideways trading. The market was able to hold gains for yet another day which was impressive given the short-term overbought extremes, strong overhead resistance and yesterday's huge upside gap. I am still leaning towards a close of the upside from yesterday which would bring SPY down to $117.25, DIA down to $112.21 and QQQ down to $54.66. I would expect that this occurs over the next 2-3 days, but Mr. Market always has a way of playing games with what should be obvious price levels. I found an interesting nugget from Jason Goepfert of Sentimentrader.com today. "According to Bloomberg , at least 500 more stocks last traded on an uptick than a downtick on each session during the past week.  The 5-day average of … [Read more...]

High-Probability, Mean-Reversion Strategy – Major Benchmarks Reach Short-Term Extreme

The S&P 500 (SPY) has pushed 11% higher since its low set last Tuesday. It has indeed been a "rip your face off" type of rally with many bears left for dead. I added two more positions today: one in the High-Probability, Mean-Reversion Strategy and one in the Theta Driver Options Strategy. The latter certainly looks to be in much better shape at the moment, but I believe we will witness a decent pullback over the coming days. Why? As I said before, the major benchmarks are currently in a short-term overbought state, but now all of them what has been strong overhead resistance. Furthermore, we had a very large gap today in all of the major indices that went unclosed. Combine the three and the risk/reward leans heavily towards a … [Read more...]

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

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My Favorite Options Strategies

News equals noise. When are people going to get it? The news means absolutely nothing to me as an options trader. The entire industry has been commoditized. And when I say this I mean that one offering (financial media outlet) is nearly indistinguishable from another. Why? Technological innovation. News is widely accessible and therefore basically the same everywhere. The only difference is how they market themselves and as a trader I just don't care about their marketing techniques. Nor do I care about the news that they spew out on a daily basis. As an options trader it doesn't matter to me. Fear is what sells. It's all over the news, every day, every hour. And while I do care about the macro-picture for my own self-interests, … [Read more...]

Responsible Options Strategies

I had the pleasure to speak with a gentleman from a prominent newsletter service this past week. It was interesting to see just how he traded and how his newsletter service and others that he was affiliated with used options. As I suspected - irresponsibly. And I told him so. His response - I was an idealist. An idealist? Why? Because I do not allow marketing efforts control my options strategies? Because I do not gamble with options by attempting to guess which way an earnings call will go? Because I do not buy out-of-the-money options in hopes that an option will move towards my chosen strike price? I could go on and on. I was amazed how little he knew about how to effectively trade options. He actually asked me about how I … [Read more...]