Real-time options education and strategies
This SPX chart reflects my current analysis of the daily time frame. The 8 SMA bands are still upsloping which represents a price uptrend although good location for a new long is currently down around 4050. That’s well below Friday’s closing price of 4105 but I’m not basing my current trade on the rising lower … Read more
Back in 2021 I wrote a post titled ‘The One at a Time Portfolio’. It refers to a strategy where, after a single trade is made, you do not add a new position to your portfolio until the first position is either exited or you’ve substantially reduced or eliminated the initial cost of that position. This strategy … Read more
When back-testing an options strategy I want to first test the potential profitability of the strategy against the best possible outcome. The home run outcome. If it doesn’t perform well under the best potential outcome then I can safely abandon the strategy and continue my search for a better one. Of course I also need … Read more
Below is the current SPX position in the account that I refer to as the PDT (Pattern Day Trader) account. It is a smaller account (less than $25K) that is limited to a maximum of 3 round-trip trades within the same day over a 5 day period. PDT accounts are especially well-suited to using longer … Read more
I’m just a student of Paul’s Vega Option’s method. But as I see it, the Vega Options strategy has three steps: One of the keys to successfully trading this strategy is understanding where your current portfolio is in this three-step process, so that you can have a clear understanding of what is driving your trade. … Read more
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
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
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
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