- 02/26/15 OTVI straddle 8.8%
- 02/18/15 SCTY calendar 1.3%
- 02/11/15 BIDU calendar -22.4%
- 02/11/15 WFM straddle 3.3%
- 02/11/15 TSLA calendar 28.1%
- 02/05/15 LNKD calendar 30.0%
- 02/05/15 EXPE straddle 0.7%
- 02/04/15 GMCR calendar 6.8%
- 02/04/15 VIX calendar 10.0%
- 02/03/15 RL straddle 13.8%
- 01/28/15 GOOG calendar 33.3%
- 01/28/15 FB calendar 15.0%
- 01/28/15 BABA calendar 26.3%
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Happy New Year everyone! Wishing you and your families a lot of health, prosperity and happiness in 2015.
2014 marks our third year as a public service. We had a fantastic year. We closed 150 trades in 2014 which produced 146.6% ROI, based on fixed $1,000 allocation per trade (non-compounded) and 6 trades open. The winning ratio was pretty consistent around 63%. We had only one losing month in 2014. Check out the Performance page to see the full results. Please note that those results are based on real fills, not hypothetical performance.
Options Trading is a business. As in any business, there are costs. One of the major costs is commissions that we pay to our broker (other costs are slippage, market data etc.)
While commissions is a cost of doing business, we have to do everything we can to minimize that cost. This is especially true if you are an active trader. The impact of commissions on your results can be astonishing.
This excellent article by Business Insider is asking the right questions (and also answering some of them):
When you pay commission fees for online stock trades, where does that money go? Do you get better execution by paying $9.99 to TD Ameritrade than by paying $1 to Interactive Brokers? How much better? Enough to justify the difference in price?
Our long term followers know that buying premium into earnings is one of our favorite strategies. I wrote about the strategy in my Seeking Alpha article Exploiting Earnings Associated Rising Volatility. IV (Implied Volatility) usually increases sharply a few days before earnings, and the increase should compensate for the negative theta. We have been using this strategy in our SteadyOptions model portfolio with great success.
However, not all stocks are suitable for that strategy. Some stocks experience consistent pattern of losses when buying premium before earnings. For those stocks we are using some alternative strategies like calendars.
Numbers don't lie. Take a look how the major indexes performed in January, and compare it to SteadyOptions performance:
S&P 500: -3.1%
Dow Jones: -3.7%
Russell 2000: -3.3%
SteadyOptions: +20.7% ROI
After booking 146% ROI in 2014, we closed 8 trades in January, producing an incredible 88% winning ratio and 16% average return per trade.
By Gery Nagy, optionsrules.com
We discussed in the previous article that the risk graph of the stock market involves unlimited risk. That means despite using super good stop levels, there might be days when the market skips your limit order.
Or, your market order could be executed at a price you did not expect. Consequently, a precise risk management cannot be achieved. Those who trade on the Forex market may groan now because this is not strictly true for them. Yes, the Forex market is not characterized by a gap up, gap down, therefore the STOP level can be more easily planned, as it is usually executed where we planned it.
Option is the contract or deal, that lets a person to sell (put) or buy (call), a certain asset before or on the specific date. There are about 72 options trading strategies. There three most commonly used options strategies: bullish, bearish and neutral or non-directional.
The following infographic describes few basic options strategies.
By Gery Nagy, optionsrules.com
In the present article, I am going to explain how you can make money if you own shares and the market moves sideways.
You know my attitude towards simple share buying, so I won’t go into details at this time. The starting point is that you own 100 AAPL shares. For some reason, you bought it and hold it, that’s your business. Meanwhile, you use the well-established, but mostly pretty weak, stock market risk management method: the stop loss. You hold the paper and expect a price increase, because you still believe in the Buy and Hold strategy ...
It is a well known fact that most retails traders/investors lose money in the stock market. The numbers vary from 80% to 95%, but the fact remains. There are many explanations for that phenomenon, such as: poor money management, bad timing, bad government policy, poor regulation or a poor strategy.
Personally, I'm not surprised. As an options newsletter editor, I see exactly why vast majority cannot make money consistently. I was there. Experienced it first hand.
But first things first.
In one of my previous articles I described a study done by tastytrade, claiming that buying premium before earnings does not work. The title of the study was "We Put The Nail In The Coffin On "Buying Premium Prior To Earnings".
I demonstrated that their study was highly flawed, for several reasons (strikes selection, stocks selection, timing etc.)
It seems that they did now another study, claiming to get similar results.
Our readers and members know that our returns are verified by Pro-Trading-Profits, an independent third party website that tracks performance of hundreds investment newsletters. They have an excellent explanation how to analyze and compare performance of different trading systems. Here are some highlights of their article.
An option provides the owner the right to buy or sell an asset at a pre-determined price before or on a certain date. Options are basically of two types- Calls and Puts. A call provides the right to the owner to buy an asset while a put provides the right to the owner to sell an asset. Trading options can be very profitable for the owners. However, it is important to gain a proper knowledge and understanding of the terms used in the options market. This infographic has been designed to make it easier for you to understand option trade.
By Mark D Wolfinger
When markets are volatile, and especially when that volatility is on the downside, it costs more cash to buy your entry into the positive-gamma game because the options are more expensive. This should make sense because “everyone” wants to buy options when the possibility of a big market move has increased.
How many times did you hear from traders "I make 50% on most trades, so I can live with few 100% losers"? I guess too many. What those traders don't tell you is what impact those 100% losers have on your overall portfolio. Lets take a closer look at position sizing and why it is critical for your financial health.
The newsletters industry is full of crooks. I see too many "gurus" promise to make you money with no effort, charging thousands of dollars in the process. They present some of the highest risk strategies (like trading weekly options) as "low or no risk". They make a bad name to the whole industry.
The Kirk Report is one of the few exceptions. This is a highly respected publication managed by highly dedicated editor, Charles E. Kirk. It is my pleasure to share some insights from Charles. I took the liberty to add some of my own thoughts.
To ensure the best service to our existing members, SteadyOptions will be closed to new subscribers on September 15. The current demand indicates that by September 15 we will reach our maximum number of members. If we reach our limit prior to September 15, the service will close before that date. We cannot guarantee you will still be able to sign up at any time in the next few weeks, so if you want to sign up we recommend that you do so sooner rather than later.
How many times did you hear the following claims:
"Our system has 90% success ratio".
"Our trades have 1 to 4 risk reward".
Lets examine those statements and see how you should put them in context and consider other parameters as well. We will use vertical spread strategy as an example.
Shares of SodaStream International rose by 25% in intraday trading yesterday on a Bloomberg News report that it is in talks with an investment firm to be taken private in a transaction that would value the Israeli home soda system manufacturer at $40 per share. What would you do if you knew the news are coming ahead of time?
I got the following email today from tastytrade:
"We Put The Nail In The Coffin On "Buying Premium Prior To Earnings"
"We look at whether or not you could make money on the implied volatility expansion leading up to an earnings announcement."
Since buying pre-earnings straddles is one of our key strategies, I went to watch the segment.
Option trading is not something you want to do if you just fell off the turnip truck. But when used properly, options allow investors to gain better control over the risks and rewards depending on their forecast for the stock. No matter if your forecast is bullish, bearish or neutral there’s an option strategy that can be profitable if your outlook is correct.
I came across an excellent post from Brian Overby, Senior Options Analyst at TRADEKING. He outlines the top 10 mistakes that new options traders make. Here are the highlights:
Over the last few years, Tesla used to report earnings during the first week of the second month of the earnings cycle (February, May, August and November). This cycle was expected to be no different. However, yesterday Tesla surprised the trading community and announced that they will report earnings on Thursday, July 31. What does it mean for the options traders?