May 22, 2017

Another Good Year for Option Trading

A few random thoughts... There is no doubt that 2013 started off on a difficult note. The fiscal cliff led to a sharp decline in implied volatility (as seen through the VIX) and the low IV environment lasted for several more months. However, we were able to adjust and the rest of the year, while having a few expected bumps in the road, ended on a positive note. So much so, that our option trading strategies once again beat the overall market. I'm not sure many other options sellers can say that this year. As the year progressed I became more and more selective with my trades. Trading in a low IV environment is difficult and hammering out trades just isn't the right protocol especially if you truly want to make a decent return. Of … [Read more...]

Trades, Trades, Options Trades

I've been waiting for implied volatility to kick up a little which is why I have not placed a trade over the past few days. Tomorrow id definitely the day. Subscriber 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 had a chance,  please join my Free Weekly Newsletter, Twitter feed and/or Facebook page. Kindest, Andy … [Read more...]

Preparing for Trading (a few options)

I'm keeping it short tonight. I have lots of trades to go through tonight. Subscribers, prepare to receive a few trade alerts throughout the day tomorrow. 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 had a chance,  please join my Free Weekly Newsletter, Twitter feed and/or Facebook page. Kindest, Andy … [Read more...]

Video: Potential SPY Trade

I wanted to do a quick video on a potential trade set-up. If anything this should give you a good (and very basic) idea how I approach credit spreads. 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 had a chance,  please join my Free Weekly Newsletter, Twitter feed and/or Facebook page. Kindest, Andy … [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...]

Building Momentum…Another Good Expiration Cycle

Despite the surprising rally over the past week or so, all of our bear call spreads are going to close out the cycle worthless. And as most of us know, in the world of an options seller worthless is a wonderful thing. We only had a few spreads on during the month of October, but both made 17.6% for the cycle. As I've been saying over the past several days, I want to add a spread or two for the November cycle but I wanted to wait until the BS in Washington passed. And now that the buffoonery has passed, I'm happy to say we've been left with a great opportunity. Just look at the overbought/oversold indicator below. Almost everything is in an overbought state on a short-term basis. And even though volatility has been crushed (as seen in … [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...]

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...]

New Heights…But For How Long?

As we all know by now, the major market benchmarks have pushed to all-time highs. The Dow (DIA) and S&P 500 (SPY) continue to frustrate those of us who sell premium for a living, but given the short-term overbought state I remain comfortable with my current positions. If anything, the current overbought state allows for more opportunities to sell bear call spreads...especially when looking at the longer-term chart below. There is no doubt that the pot odds side with the bears at the moment. Even if we are wrong in our directional assumption, like we have been over the past few months, by using a high-probability strategy a margin of error is inherently created. Basically, you can be wrong, yet still have a profitable trade..that … [Read more...]

Time For a Few More Bear Call Spreads (SPY)?

Today's price action had the bears extremely excited for most of the day. While most experienced traders expected some support at the 1400 level I am not sure that anyone was expecting the bounce that we witnessed during the latter part of the day. I am still somewhat bearish. My thought is that we will eventually see the two SPY gaps (11/19 and 11/29) from November close over the coming month. But as we all know there are no guarantees. No one holds the holy grail to trading. Which is why I always make trades with a margin for error. Credit spreads allow me this benefit...and since I have a short-term bearish view a bear call spread is my strategy of choice. What is Bear Call Spread? A bear call spread is a credit spread … [Read more...]