Real-time options education and strategies
In the world of retail trading, selling credit spreads is a very popular strategy. Mostly, credit spreads are taught as so-called income trades. According to the gurus, income trades are “non-directional” trades–i.e., theta-driven positions that don’t really depend on the direction of the underlying. Rather than trade based on where they think price will go, … Read more
The title of this post is a little deceiving, it should read ‘Risk On…Risk Reduced’. The only truly ‘risk off’ trade is an exited trade! If that’s not clear what I mean by that it should be clear after you’ve read the post. Over a period of just less than 48 hours I made 7 … Read more
Lots of ‘experts’ are calling for a market crash but I don’t know of any traders who’ve had long term success following the ‘experts so what do the charts say? SPX had a strong rally in the final hour of trading on Friday but still ended the week down about 200 points. The Friday afternoon … Read more
This post is about the smaller account that I manage for somebody. The positions are smaller and easier to understand than my positions which don’t seem that helpful for demonstrating good trading techniques! 😄 On twitter I refer to it as the PDT account. PDT is short for Pattern Day Trader and if you don’t … Read more
There are plenty of references to the RS+ trade on the blog and in my twitter feed. It’s certainly one of my favorite option structures. Basically, a RS+ is a version of a 1×2 (or 1×3) Ratio Spread in one expiry plus 1 (or 2) long options in a later expiry. It could also be … Read more
Over the years I’ve developed my own methods of analyzing price action and that has helped me stay on the right side of the trade most of the time. Of course there are going to be failures along the way that aren’t necessarily due to a misreading of the chart but rather a news events … Read more
Friday, Sep2, could, in retrospect, be an important day in revealing a clue to the next directional move in /ES (S&P 500 index futures) and the other stock indexes. The low of Thursday (#2), Sep2, was 3903.65 and price rallied strongly closing near the high of the day leaving a relatively long lower wick and … Read more
Yesterday I tweeted that there was an opportunity to add long /ES (bullish) Deltas on the potential 30-minute bullish reversal. The buy zone was 3971-74 and the stop was 3964.50. That’s 10 points of risk. That’s important because I didn’t know that it was a bullish reversal, only that it had the potential to be … Read more
Even though K.I.S.S. stands for Keep It Simple Stupid it’s not my intention to refer to anyone reading this post as stupid! It’s a reminder to all, myself included, that we can often make things more complex than they really have to be. In this post I’m going to present a potential trade that was … Read more
That was quite the bullish reversal last week! Below is the SPX daily chart. The green, yellow and red lines represent last year’s high, HB (Half-Back or midpoint) and low. For weeks now I’ve been expecting SPX to reach 3662 because that was last year’s low and price had already dropped below the 61.8% retracement … Read more