Is This the Beginning?
November 29, 2011
A Few Random Thoughts
I can’t remember how many times I have seen 300 point opens in the Dow futures.
The rally today was strong. The talking heads will attribute the advance to Europe or a piece of economic data, but in reality the pop came on the heels of one of the lowest short-term oversold readings in years. As a result, the probability of a short-term advance was extremely high.
Last week the market lost over 4% in just over 3 1/2 days on extremely low volume. The entire move displayed very little conviction.
Bullish? Yes, I think this move could extend itself for several weeks as Santa Claus and his typical holiday rally looks imminent. Add the fact, that seasonally we are entering one of the strongest periods of the year and I think we could see a decent short-term rally that could last into the first few days of December. There are a few large gaps on the upside in most of the major indices so I think the market is more prone to take out the gaps before we possibly see more weakness.
One thing is certain, the next few days should be quite revealing, but moreover, fun. Yes, fun. It is not often that I am bullish, so it is kind of nice to actually have some short-term conviction to the upside.
I will be back later this weekend with more options related info. Stay tuned!
Theta Driver Options Strategy (limited room available): Free 30-day trial
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Kindest,
Andy
Thank You Papandreou
November 3, 2011
I am going to keep it short and sweet tonight.
I am amazed at just how many people I know that have turned bullish. Seriously, bullish?
Absolutely, nothing has changed since a few months ago, if anything we have more clarity as to why this recent bounce was just a bear market rally. This euro crisis is far from over and I still think that the gap from 9/1/10, yes 9/10 is going to close before we move substantially higher. But, people are easily swayed by a sharp rally.
So, as I type this futures are substantially lower, again. And, my guess is that the selling continues throughout the evening and into the open tomorrow.
Check out the following vid: Easy Come , Easy Go
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Back in a Neutral State. Where Now?
November 1, 2011
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 my :
High-Probability, Mean-Reversion Options Strategy : Free 30-day trial
Theta Driver Options Strategy (limited room available): Free 30-day trial
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High-Probability, Mean-Reversion Options Strategy
October 14, 2011
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 unclosed gaps in all of the major benchmark ETFs. Combine all of the aforementioned and the high-probability move leans heavily towards the downside. But, as we have seen over the past few weeks the market sometimes has a mind of its own.
I will be back with a lengthier discussion in the weekend report due out Sunday, including the overbought/oversold indicators. Stay tuned!
Kindest,
Andy
High-Probability, Mean-Reversion Indicator – Short-Term Reprieve Looks Imminent
October 11, 2011
It was another day of sideways trading. The market was able to hold gains for yet another day which was impressive given the short-term overbought extremes, strong overhead resistance and yesterday’s huge upside gap.
I am still leaning towards a close of the upside from yesterday which would bring SPY down to $117.25, DIA down to $112.21 and QQQ down to $54.66. I would expect that this occurs over the next 2-3 days, but Mr. Market always has a way of playing games with what should be obvious price levels.
I found an interesting nugget from Jason Goepfert of Sentimentrader.com today. “According to Bloomberg , at least 500 more stocks last traded on an uptick than a downtick on each session during the past week. The 5-day average of the closing reading is now over +900. While the S&P 500 was trading below its 200-day moving average, this has only happened 3 other times (10/16/01, 11/28/08 and 3/18/09). All three saw the S&P drop at least -3% during the next 2 sessions, though there was nothing consistent about them after that.”
A 3% drop would certainly close the gap that I have mentioned over the past couple of days and would be highly beneficial to our current trades in the High-Probability, Mean-Reversion Strategy and the Theta Driver Options Strategy.
Links of Interest
If you haven’t already, don’t forget to sign-up for my :
High-Probability, Mean-Reversion Options Strategy : Free 30-day trial
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Options Trades in the High-Probability, Mean-Reversion Strategies
August 22, 2011
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 days. Volatility remains high so we might be able to extend our gains this months. My goal is to seek out a credit spread trade that allows a 10-12% gain over the next 25 days. I might have to take a bit less if volatility declines sharply tomorrow, but my guess is that unless the market moves sharply higher, volatility will remain above 40 which will allow me to continue to sell some great premium.
For all of those who are still interested in the Theta Driver strategy I still have a few remaining spots. Once the spots are filled I intend to close the strategy to new members. I hate to keep mentioning this, but I have had quite a few of you email me over the past week so I just wanted to remind you.
Market Mumbo Jumbo
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Buy and Hold is A Crock – Cash is a Position – Diversify Through Strategies Not Stocks
August 17, 2011
The major market averages continue their struggle to push higher over the past three trading days. I still think the market pulls back to close the 9/1/10 gap over the next few months.
However, as I always say, all of the noise truly doesn’t matter to me, I trade market extremes and volatility. So, it doesn’t matter to me where the market goes or how it performs over the long-term. These are uncertainties that have zero statistical advantages.
I don’t diversify in stocks – I diversify in strategies. This is how to effectively invest your money. This is why I use the High-Probability, Mean-Reversion Strategy and the New Theta Driver strategy. It exposes me to a limited number of days in the market. I am often in cash. I only trade opportunities and the opportunities that I trade have to have statistical advantages.
Here is a great video of Entreprenuer Mark Cuban. Love him, or hate him one thing is certain – you can’t deny his success. While I think his options strategy of buying out-of-the-money calls and puts is a bit naive (I would love to speak with him about more effective options strategies as I know he would be responsive), Mark seems in line with what I have been trying to convey for years about investing. Cash is a position. Take advantage of extremes, etc. Don’t miss this video – very insightful. Check it out!
Theta Driver Options Strategy
I placed my first official trade in the Theta Driver options strategy Monday. For those of you still interested I have a few remaining spots left 8 to be exact.
I am very excited about my new income options strategy because I have said for years that diversifying your options strategies is the best way to make long-term consistent gains in the options market.
High-Probability Options Strategy
As you can see below there are not that many ETFs in an extreme state. However, I have my eye on DBA at the moment. If the agriculture ETF opens higher tomorrow there could be a trigger in the strategy. This could be the first signal for August. Remember, it is the long-term results that we are after. There will be slows periods just like there will be periods of heavier trading. I do not force trades. Subscribers stay tuned for an email alert/tweet if the trade indeed comes to fruition.
Market Mumbo Jumbo
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Gold Hits a Short-Term Extreme
July 14, 2011
*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 of my spread higher, but the recent decline has pushed the spread back to close to break-even.
Once July expiration passes theta (time-decay) will accelerate. If the underlying ETF trades around this area or moves lower I should be able to get out of the spread for a nice gain in the next few weeks. Stay tuned!
In the meantime, I am looking at initiating a spread on the VIX and possibly a spread on Gold. I will be discussing the potential trades in my upcoming weekend report.
*I will be offering my new Credit Spread Strategy after August Expiration so if you are interested please email me and I will save you a spot. I will be limiting the amount of subscribers. The cost of the new service will be the same as my High-Probability, Mean-Reversion strategy – $99 per month. Please do not hesitate to email me with any questions that you have.
The Strategy
Again, I like my new strategy because now both of my options strategies are working in unison. I am able to collect premium in the Credit Spread strategy while patiently allowing time decay to works its magic. And, while I allow the time decay to eat away at my credit spread I am able to play short-term extremes in the ETFs I follow in the High-Probability, Mean-Reversion strategy. Intermediate and short-term options strategies at work.
Just like diversifying a portfolio of stocks, you should do the same when investing with options – diversify your options strategies.
Here it is: the first trade in my new Credit Spread Options Strategy, officially named Crowder’s Credit Spreads. I will continue to go over the trade in full detail in the Free Weekly Options Report.
Market Mumbo Jumbo
Summary
SPY remains range-bound!
Nothing New Here: Not much has changed over the past few weeks - range-bound trading persists. I appears we could see the markets move sideways for a few more months. Are the summer doldrums already upon us? How long can SPY stay in this range of roughly $126 to $137? The question is, while I continue trading extremes in the HPMR strategy , how can I take advantage of the range bound movement at the same time. You guessed it – a credit spread! I will discuss this further in Weekly Options Report.
If you haven’t already, don’t forget to sign-up for my Free 30-day trial.
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Options Strategy Indicator – Overbought / Oversold Extremes
What is an Option? More Importantly, How Do I Trade Options?
June 27, 2011
What is an option you ask? More importantly, how do I use options to enhance my portfolio returns.
The second question is by far the more difficult question to answer because it requires a personal look into how you see yourself as an investor. One thing I I can guarantee – there is an option strategy that exists that you will cater to your needs. Whether looking for a pure hedge to your current stock positions, a super aggressive weekly call or put options or somewhere in the middle, you should be using options to assist your investment needs. If you don’t you are making a huge mistake.
Yes, I agree – there is a lot of bulls$%^ options services out there touting outlandish gains. 500% profits in 2 days, 912% profits in one day, etc. You know what I am talking about it. Don’t believe them. Yes, you can make a quick winner on occasion, but it is the equivalent of hitting a single number on a roulette table – it is possible, but more importantly, it is not sustainable. If that is what you are looking for then you are on the wrong website.
My options strategies are not “get rich quick” strategies, rather sound options strategies based on three basic ideas – patience, position-sizing, and long-term performance.
After speaking with hundreds of investors, I discovered that the majority of investors were not looking for a ‘get rich quick’ scheme, or a foolproof method of trading options (we all know there isn’t one). What they wanted was a service with established capital preservation goals and historically proven long-term successful investment strategies. They wanted options strategies that would produce consistent, modest gains month after month, year after year. They also wanted to know that unnecessary risks were not being taken, but rather a methodical, tested set of rules were being utilized which would produce long-term gains.
My options strategies were born from the collection of ideas mentioned above. After trading almost every known options strategy, I fulfilled the requests of the investors and traders I spoke with and have identified several historically proven stock options strategies for long-term success in bull and bear markets. Again, all of my options trading strategies are based on three simple principles: patience, position-sizing, and a focus on long-term performance.
I encourage you to learn more about my stock options strategies by joining my FREE weekly options newsletter. Every day in my daily blog I will provide an in-depth look at my trading strategies, including specific trading guidelines. Diversify your portfolio, better yet, educate yourself with one of my options strategies.
It might not be the options strategy for you, but for a Free 30-day trial why not give it a try.
Also, for those of you who live on Facebook. You can access my daily info on the social network as well. Just click on LIKE.
Options Indicator – Overbought – Oversold
None of the ETFs I follow in the High-Probability, Mean-Reversion Indicator have moved into a short-term extreme. I will be back with the indicator chart tomorrow. Stay tuned.
You can see all of the performance results for the High-Probability, Mean-Reversion strategy here.
Daily Options Links of Interest
Have a wonderful evening!
Andy
Potential Options Trade – Short-term Overbought
June 20, 2011
Market Mumbo Jumbo
The market moved higher today and pushed a few of the sector ETFs near a short-term overbought extreme.
According to Jason Goepfert of Sentimentrader, “Tuesdays are good “bottoming” days, and June is a good bottoming month. The 14th and 15th trading days of the month are also higher-probability days for a low”. Moreover, the week after June option expiration has been negative 72 percent of the time since the inception of the S&P 500 futures. Every one of the past 6 years has been negative during this week.
As the market moves ever closer to a short-term overbought I expect another test of the recent lows in SPY. A gap higher at the open in SPY and I will most likely take the first position of the month in the High-Probability, Mean-Reversion Options strategy. Long overdue, but again, I never force a trade – I always allow the trade to come to me.
Also, I dis not place a credit spread today so stay tuned because tomorrow will be the day. Again, stay tuned.
Options Indicator – Overbought – Oversold
Several of the ETFs I follow in the High-Probability, Mean-Reversion strategy have pushed into a short-term extreme state including UNG, EPI and EPU. If all goes well tomorrow, we could see a trade in one of the aforementioned ETFs or potentially one of the major market benchmarks. Subscribers stay tuned!
You can see all of the performance results for the High-Probability, Mean-Reversion strategy here.
Daily Options Links of Interest
Summary
Same message: Not much has changed over the past few weeks - range-bound trading persists. I appears we could see the markets move sideways for a few more months. Are the summer doldrums already upon us? How long can SPY stay in this range of roughly $126 to $137? The question is, while I continue trading extremes in the HPMR strategy , how can I take advantage of the range bound movement at the same time. You guessed it – a credit spread! I will discuss this further in Weekly Options Report.
If you haven’t already, don’t forget to sign-up for my Free 30-day trial.
Also, for those of you who live on Facebook. You can access my daily info on the social network as well. Just click on LIKE.
High-Probability, Mean-Reversion Options Indicator
