April 24, 2017

More Downside to Come?

Just a quick post tonight...absolutely exhausted. As a famous man from L.A. once said, "today was a good day". XOP was down over 2.5% today, so I decided to lock in profits on our XOP puts. I hope some of you were able to take advantage. The pullback also helped out our credit spreads in SPY. And best of all, the pullback has given us the opportunity to add a few more positions. I really like FXI, USO, and TBT right now and even XOP still intrigues me. I will short the latter with puts again if it manages to bounce higher over the next few days. But all of these offer good opportunities to sell some premium. Indeed, the risk/reward is very high for those willing to take on bearish strategies. Subscribers stay tuned for … [Read more...]

Ignore the Noise…Focus

“What do you think about the latest government fiasco?” That’s a question I often receive. My typical response, I don’t care. Okay, that may be a bit harsh, but it is true. For the most part I really don’t care about the daily news that flows in and out of the market. I am an options trader. I trade strategies based off probabilities. I create statistical advantages based on my current market assumptions. We must realize that knowing what is going on in the news and knowing how to make money consistently are two separate things. For successful options investors it’s about your strategy, your logic, your process, it doesn’t matter what you think the market the latest economic report is going to say. I realize it’s a difficult concept … [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...]

On the Eve of Options Expiration…..

I am always amazed how large the opportunity to “make it big” factors into the great magnetism of the market. The belief that anyone, from any background can be successful and make tons of money has quite the allure. But, in all of this euphoria people neglect to think about all of those that failed before them. And believe me the failure rate is high. Yet, investors/traders continue to choose the most difficult of investments to trade – stocks. Stock-only traders are at a complete disadvantage because they have no way to trade the randomness of the market. They have a 50/50 chance of success for each and every trade. Bottom line – stock investors/traders are truly at a disadvantage. Again, stock investors only have two ways to make a … [Read more...]

Was Tuesday the Top?

Numerous downgrades, more European woes, news of inevitable Greek default, financial sector struggles among other bearish news led to a lower, oops, higher open today? Yes, higher. It has indeed been rather frustrating as a short-term bear since the gap open on 1/3. But, oftentimes when you are a contrarian and you make your livelihood on fading short to intermediate-term market extremes you often get into positions early. Any professional with any cred will tell you the same. It is to be expected. However, we are now nearing the area of max pain. While I thought we would see an immediate push lower after the first week of the year, I was willing to accept a push up to 1300 on the S&P or roughly $130.00 in SPY. We hit that level … [Read more...]

Payroll Probabilities. Ready to Employ Options Strategies?

Jason Goepfert of Sentimentrader.com came out tonight with some interesting statistics on how the S&P has performed immediately following the January payroll report. The S&P has declined 6 of the last 8 years on the day the Nonfarm Payroll report was released in January. Often, that weakness has continued, which is what we've been touching on with regard to questionable seasonality heading into the latter half of the month. There is optimism the Payroll report will beat expectations due to the big beat from the ADP report on Thursday. When the Payroll report beat expectations in January, then over the next two days it rose only 1 out of 5 times, averaging a return of -1.1%. When it missed expectations, … [Read more...]

Will the Gap Close?

All of the major indices gapped up on the first day of the trading year and now we are seeing a push into overbought territory coupled with decent overhead resistance. As an options trader this is the types of set-up that I look for and trade without hesitation. Once I make the assumption that the gap will close and the overbought state will move back into neutral territory I then use the appropriate options strategy to take advantage. I am an options trader. I trade strategies based off probabilities. Nothing new here. I just want to teach people how to trade effectively and profit by using my options high-probability options strategies.  For successful investors/traders, its about your strategy, your logic, your process and nothing … [Read more...]

Market Sets Record

What a day! According to Jason Goepfert, Tuesday was "the best day in 30 years." "The buying stampede resulted in just under 98% of all volume being transacted in stocks that were positive on the day." The highest ever. Historically, after large Up Volume days the market consolidates and I would expect that this time would be no different. All of the ETFs I follow have pushed back into neutral territory and several of the major market benchmarks are very close to a overbought state. With that being said, I intend to add a credit spread in the Theta Driver strategy tomorrow and depending on the price action tomorrow I might just add a position in the High-Probability, Mean-Reversion strategy. Subscribers stay … [Read more...]

The Market Moves Further Into and Oversold State

The market has pushed into one of the most short-term oversold states that I have seen in quite some time. Almost every ETF I follow is now in a "very oversold" state with RSI (2) readings below 5 and over half below 1 - a rarity indeed. So, now is the time that I want to be aggressive on the long side, but only for a few trading days. Conditions like the aforementioned almost always work themselves back to mean-reversion and I want to be a participant when the short-term occurs. I already have several trades on in both of my options strategies and plan on adding several more over the next few trading days, that is unless we see an enormous bounce before the opening bell Friday, which I think is highly doubtful. It is during times … [Read more...]

High-Probability, Mean-Reversion Indicator – Short-Term Extremes Reside

I will be back later with a more thorough account of the day and my thoughts as we head towards the holiday. For now check out the short-term extremes in the market. A bounce looks imminent. If you haven’t already, don’t forget to sign-up for my : Free Weekly Report High-Probability, Mean-Reversion Options Strategy : Free 30-day trial Theta Driver Options Strategy (limited room available): Free 30-day trial Twitter? Join Here. Also, for those of you who live on Facebook. You can access my info there as well. Just click on LIKE. … [Read more...]