Real-time options education and strategies
Before I go into the specifics of these trade scenarios using the SPX daily chart I want to make the point that I use the same strategy with the same parameters on charts on all time frames. The levels referenced in this post are based on the prior candle so the same analysis applies to … Read more
This ThinkBack simulates establishing a long (bullish) option trade on 12-31-2020. Comparing buying a 60 Delta Call to a 30 Delta Call. If I want to compare the actual Deltas I would have to purchase two of the 30 Delta Calls so that both positions start out with approximately 60 Deltas. However, one of the … Read more
I want to preface this lesson with an explanation of why this trade will look larger in size than my typical trades from the past in this service. I used to have 2 separate trading accounts that go back many years and I finally got tired of the occasional mistake of hedging a position in … Read more
The first step in my process of initiating a new option position is identifying a promising chart setup. I’ll consider setups on various time frames anywhere from the 65-minute charts all the way up to the monthly charts. My typical trades originate from the daily and weekly charts but I’m always looking for the best … Read more
One of the most reliable chart patterns for an upcoming directional trend is the consolidation range. Below is the daily chart of MU. Price experienced a strong 45% rally from the beginning of November thru December 4th. Since then price has moved sideways in a $5 range between ~69.50 and ~74.50. Since a range like … Read more
There are two key ingredients in any successful options position. The first is trade location. This is the most difficult step even for experienced traders. Just look at most any price chart and it seems like a series of random moves in either direction. I have spent many years trying to interpret those price moves … Read more
For the purposes of this post I be focusing on the longer-term charts, primarily the weekly chart. The weekly chart is particularly useful for finding entries into option positions with 3+ months of duration. Of course they can be used for shorter-term trades but a balanced option portfolio will be comprised of bullish and bearish … Read more
In the inventory of positions that I’m currently carrying in my portfolio I have a bearish trade in MSFT and a bullish trade in AAPL. That doesn’t make much sense does it? If AAPL goes up then MSFT will likely move in the same direction and vice versa. That’s probably true. On the other hand, … Read more
Trading is hard. That’s not breaking news. We all know that. The hardest part of trading for most is once in a trade when to exit. Often a trade is initially profitable only to have it reverse and take back all of the profits and then some. After that experience it’s easy to exit a … Read more
A lot of range bound trading this past week. It’s too easy to get chopped up during those times and directional positions almost always lose value regardless of which direction you’re trading. Good time to sell Iron Condors, right? If the range is small enough, yes. However, if the range is fairly large then short … Read more