June 25, 2017

Will Our Expectations Come to Fruition?

We all were witness the so-called Summer's Gap that occurred at the open this morning. Unfortunately, for the bulls, the short-term very overbought state was too much. All of the major indices sold off near the close. But wait, not all is lost. The Overbought/Oversold indicator indicates that we still have quite a few short-term extremes left in the market. The most notable are GLD and SDS on the oversold side of things. DIA and XLP reside in opposite territory as they are both firmly entrenched in a very overbought state. I put on a few trades today for my subscribers with one of the aforementioned ETFs included in the mix. It was just too good of a spot to ignore a trade...a gap higher into a short-term overbought state while … [Read more...]

When Trading Options Use Probabilities to Your Advantage

I am often amazed by the  lack of common sense when it comes to investing. Investors seek the best possible information, unfortunately most turn to the wrong sources. For starters, turning on the television for investment advice, in most cases, is a big no no. Yet, how many people listen intently to the daily drivel coming out of screaming mouths on CNBC. Investors, particularly traders, should know that every trade spouted from these sources have a 50% chance of success. Add in transaction costs and the probability declines further. Yet, the majority of investors and traders take this approach, mostly because they aren't privy to any other form of investing. Self-directed investors aren't aware that there are strategies based purely … [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...]

High-Probability, Mean-Reversion Options Strategy

I hope all of you with a bearish lean are surviving this absolutely crazy market. I know that it has been the most difficult month for the High-Probability, Mean-Reversion Options Strategy in since its inception. The ongoing nine day rally has pushed both of our positions in losing territory, yet I am still confident that the performance will improve as we move towards the latter part of the month. No one said trading was easy, especially options trading, but it is all about perseverance . As for the Theta Driver Options Strategy we are well on our way to the third straight month of gains. All of the major indices have moved into short-term "very overbought" extremes, while hitting strong overhead resistance. Moreover, we have two large … [Read more...]

Options Offer Tremendous Opportunities

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...]

Options Trades in the High-Probability, Mean-Reversion Strategies

A trade in the High-Probability, Mean Reversion Strategy looks likely if IWM happens to open flat or open tomorrow. Of course, there are a few other thng is that need to line-up, but the first trade of a slow August seems likely. Subscribers stay tuned! Our latest Theta Driver Options trade looks very good. Last Monday, I placed our first trade for a credit of $0.25 and thanks to some help from the bears (although a flat to slightly higher market would have worked as well, just not so quickly) the credit spread is now worth less than $0.05. With only $0.05 and 25 days left until September expiration I will mostly likely lock in the gain for roughly a 9% gain (including commissions) and place another Theta Driver trade within the next few … [Read more...]

Options Strategies Continue To Shine In This Volatile Market

I am going to keep it rather short tonight. The market moved lower today, but the bears had a rough time pushing the major benchmarks decisively lower. We could still see a push lower, but over the short-term the direction leans towards the bulls. However, there are a few international ETF's that have pushed into an oversold state and a few could be potential plays going forward. Currently EWZ, EWP and TBT are on my radar for short-term plays and as always I will inform all of you (my paid subscribers) in real-time if and when a trade occurs. New Credit Spread Options Strategy – Beta The two week push by the bulls has pushed the value of my credit spread to approximately $.51 which is $.17 higher than my original price. For all … [Read more...]

Patient, Methodical Approach Leads to Further Gains in the High-Probability, Options Strategy. Portfolio Up 47.9% Since Inception.

On Wednesday I entered into some IWM puts. Of course, the market raced higher and my trade was quickly underwater, but I knew that the probability of a short-term decline was extremely high so I placed another trade and the following day the market declined. I stuck with the trade over the weekend because the short-term overbought reading had not worked itself out so the probability of a move lower remained high. Today, the market pushed significantly lower at the open so I was able to get out of my combined position for a nice profit that pushed my the High-Probability, Mean-Reversion options strategy to new high of 47.9% since its inception back in November. New Credit Spread Options Strategy – Beta The surge last week pushed the … [Read more...]

Short-Term High-Probability, Mean-Reversion Indicator. A Few Oversold ETFs, But No Extremes.

More uncertainty entered the market today. North and South Korea conflict, more allegations of insider trading and continued concerns plagued the market today and one has to wonder if this market can gain any ground as we move closer and closer to the 2011. Fortunately, I do not concern myself with these types of issues in my trading. The so-called noise does not concern me as much as when the ETFs I follow hit a short-term oversold/overbought extreme. The High-Probability, Mean-Reversion Indicator was once again successful in pointing out the short-term direction in overbought Retail sector (RTH) as well as the Semiconductors (SMH). After today's market-wide drubbing, several of the ETFs that I follow have moved into a short-term … [Read more...]

Short-Term High-Probability, Mean-Reversion Indicator. Semiconductors and Retail Overbought.

As I stated last week, the day after Thanksgiving is historically bearish. Well, for most of the day the historical tendency held true, but as the day progressed the bulls slowly chipped away at the losses and as a result, two out the four major indices (QQQQ and IWM) managed to close the day higher. Actually, quite a few of the ETFs I follow in my High-Probability, Mean-Reversion Strategy advanced today, but only two managed to reach a short-term overbought extreme: Retail (RTH) and Semiconductors (SMH). Both moved into a short-term overbought territory and the RSI (2) for both pushed above 95. As a result, both on currently on my radar, so subscribers stay tuned tomorrow as you could be receiving a trade alert at the beginning of the … [Read more...]