August 17, 2017

High-Probability, Mean-Reversion Indicator – Advantages of Diversified Options Strategies

Before I get started I want to discuss a lingering frustration of mine - the financial services arena. Yesterday, I posted a WSJ interview with Mark Cuban. Mark had a few very insightful ideas for the public including "buy and hold is a crock of s#$!" and "diversification is for idiots." I definitely agree with Mark's first statement - buy and hold is no longer a viable strategy. However, I think he needs to expand on his last statement. While I do agree that diversification in stocks is well, not useful when applied in the typical manner. Because most over-diversify. And quite honestly, I don't bother investing in stocks. It ties up way too much of my capital and I can create far better statistical advantages using options rather than … [Read more...]

Straight Call Option and a Credit Spread

The long awaited trade finally came to fruition today in the High-Probability, Mean-Reversion Options Strategy as well as my new High-Probability, Mean-Reversion Credit Spread Option Strategy. Subscribers were obviously privy to the former trade and if all goes well and the market ticks down tomorrow, we could see another nice gain in the options strategy. As for the new Credit Spread options strategy here is the trade that was placed: (click to enlarge) As you can see I sold a vertical call spread or a bear call spread, whichever name you prefer it doesn't matter to me. I was able to sell the spread for $.34 which will give me a 17 percent gain (excluding commissions) if the Russell 200 proxy ETF (IWM) closes below 86 at … [Read more...]

VXX breaking to all-time lows.

Was it all a facade? Yesterday, the selling was heavy and historical as the NYSE TICK hit astronomical levels. Panic-selling usually leads to a short-term bounce, but a breach above $118.70 would once again nullify the bearish attempts yesterday. We have seen this type of price action¬† (heavy selling) five days over the past six weeks and all have led to higher prices afterward. However, this time it is different: yesterday's selling was historical. The NYSE TICK hit levels not seen since the 9/11 crash and the Flash Crash in May. Given the aforementioned and the fact that the next five trading days are historically bearish, I am still sticking with the bears, but my sentiment is strained and I will be exiting if we move up through the … [Read more...]