August 19, 2017

Sometimes Good Fortune Pays

Today was one of those days. We had network issues today, so I spent most of my day working offline. I haven't done that in a long, long time. As frustrating as the outage was, it saved me a little bit of cash because I was ready to fire off a few directional trades today. After looking back at the SPY chart I would have most likely entered into a trade around $176.80 so I saved myself roughly $0.40 or about $0.15 to $0.20 per option contract. Hopefully, my good fortune continues tomorrow when I attack this market with a few short-term trades. All of the major benchmarks are in an overbought state with SPY reading the most extreme. My intent is to add a few credit spread trade as well as some short-term aggressively directional … [Read more...]

Still Hovering in a Short-term Overbought State Nears the Highs – Could We See A Double Dip?

Roughly one week ago we exited what would be a profitable directional trade in XOP. XOP had climbed into a short-term overbought state, so I decided to short the ETF using puts. Now typically, I am a seller of options, but the set-up was just too good to pass up for an aggressive style trade so I bought a few puts. The result was a 74% gain over just a few trading days. While I'm not going to anticipate similar results this time around, I am excited about the opportunity ahead. We are greeted with what looks like another opportunity in XOP among other ETFs. I reluctantly did not place any trades today, although I was tempted to place a trade at the closing bell. So, hopefully we see a relatively flat open so I can make a few … [Read more...]

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...]

The Time is Now

After completing my daily routine of updating the short-term oversold/overbought list of highly-liquid ETFs for the High-Probability, Mean-Reversion indicator I can't help, but to be excited for the days ahead. Of course, I'm talking short-term, but I think this extends through the November and December expiration cycles as well for those of us who like to sell options. But if you like to play the directional game, which I do once in a while, you can't ask for a better time. Indeed, the God of Probability is smiling right now. Just look at all of the short-term extremes in the market right now. Take your pic. The fact, that all but volatility is in a short-term extremes tells us a mean-reversion is likely. Historically, when we see … [Read more...]

Major Indices Remain in a Short-term Overbought State

Random Thoughts Three of the top five most short-term overbought ETFs that I follow are major market ETFs. DIA, SPY and IWM (in that order) are currently "very overbought" on a short-term basis. The RSI (2) of SPY and DIA are roughly 96 and above and IWM is not far behind at 92. As I write this the futures are higher and if we open at these levels we will see another test of the recent overhead resistance that has plagued the bulls since last Wednesday's historical surge. As I stated yesterday with DIA and SPY in short-term extreme overbought states coming off huge gaps to the upside and battling with strong overhead resistance the probability for a short-term reprieve is high. However, as we all know, stranger things have … [Read more...]

Bullish – Bearish – Bullish – Bearish

On the Tuesday before Thanksgiving I turned into a short-term bull. The High-Probability, Mean-Reversion Indicator had pushed into a short-term oversold state with readings not seen in months and as a result, I bought a few, two-month out calls. I recently sold my calls after the huge advance last Wednesday in the HPMR strategy and now I find myself back in the bearish camp. Over the past several days the market has struggled with what seems to be an area of strong overhead resistance. The struggle follows the huge gap from last Wednesday. Couple the aforementioned with the short-term overbought extremes in the market and I expect to see another short-term pullback over the next few trading sessions. It is my hope that the market allows … [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...]

Gold Hits a Short-Term Extreme

*Over the short-term Gold (GLD) has pushed into 'very overbought' extreme which could trigger a trade over the next few trading days. If gold happens to move higher and thereby push further into 'overbought' territory I will most likely enter a trade over the next few days. As always, subscribers, be on the lookout for a real-time trade alert and tweet of the trade. New Credit Spread Options Strategy – Beta The market moved lower again today and the Russell 2000 (IWM) is now 4.3 percent below the 86 strike. I sold a vertical spread with 53 days left until August expiration for a $.34 credit and now the spread is worth approximately $.45. The two week rally that occurred during the latter part of June/beginning of July sent the price … [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...]

Triple Witching – Potential Credit Spread Tomorrow

Market Mumbo Jumbo It has been an interesting options expiration week. The S&P 500 (NYSE: SPY) has lost a total of $0.30 since the close last week - a paltry decline.  However, this did not stop Mr. Volatility from finally making an appearance. Options traders, particularly those of us who sell options premium, can finally rejoice. Options premium has finally moved back into this market. Now if the VIX could just hold 20 and move as high as 35 I would be one happy option trader. With that being said, I look to place a position at some point tomorrow in the my new credit spread strategy. Stay tuned! Options Indicator – Overbought – Oversold Every ETF that I follow basically stay within a short-term neutral state today so I … [Read more...]