2015 marks our fourth year as a public service. We had a fantastic year. We closed 129 trades in 2015 which produced 195.6% ROI (117.3% gain on the whole account based on 10% allocation). The ROI is based on fixed $1,000 allocation per trade (non-compounded) and 6 trades open. The winning ratio was pretty consistent around 75%. We had only one losing month in 2015.
I came into excellent article by Peter Brandt on Drawdowns and Scammers. Peter explains why most long-term profitable traders spend the vast majority of their trading careers either in a drawdown or recovering from a drawdown. Any slick promoter who tells you different is not dealing from a full deck.
Weekly options, first introduced by CBOE in October 2005, are short term options as opposed to traditional options that have a life of months or years before expiration. Originally, new series for Weekly options were listed each Thursday and expire the following Friday.
As Rookies, one of the most basic concepts we learn is that: An option gives its owner the right, but not the obligation to exercise the option at any time before the option expires. Eventually we learn that this applies only to American style options and that European options may only be exercised only when expiration arrives.
Iron Condors have gained a lot of popularity among professional money managers and retail investors. It is a market neutral strategy that allows you to profit when the underlying price moves sideways. Iron Condors usually have a limited risk and a high probability of success.
Every premium seller faces a situation in which it is clear that getting out of a risky situation is the best move. Sometimes we make a clean exit. At other times the position has become too large because imminent risk has increased. At those times we can return to a comfortable situation by exiting a portion of the trade.
An options trader said on CNBC to buy OTM call spread before AAPL earnings. The headline was Here's how I plan to quickly make 317% on Apple. Nice headline and nice way to attract viewers. But was it a good way to trade earnings or was it a pure gamble? We are about to find out.
Options can be risky, even very risky, but they don't have to be. There are a lot of myths and misconceptions about options trading. Here is one of them: you should aim for at least 100% gain in each option trade, otherwise it is not worth the risk. Is it true?
On CNBC's Mad Money, Jim Cramer has a segment called "Am I Diversified?". A caller tells Jim about five stocks in his or her portfolio and Jim has to decide if the caller's portfolio is "diversified." So for the retail investors out there, Cramer is sharing his top tips on how to manage your own portfolio.
One of the more difficult aspects of options trading is knowing when to take a profit. No one likes to ‘leave money on the table.’ However, I also hope that no one likes to lose thousand of dollars trying to earn another $50 to $100. There is a compromise somewhere.
NFLX is scheduled to report earnings on Monday July 19, 2016. I was asked the following question on one of the online forums: "What option to trade to protect NFLX shares being held thru earnings on Monday"? My answer was: "That depends what level of protection you want".
Our LC Momentum model holds stocks as its core position. Long term empirical evidence across global equity markets shows equities significantly outperform all other major asset classes since 1900. Morgan Housel recently published an article about the last seventy years of US stock market returns, and how they have to regularly climb the wall of worry.
In case you do not follow world economic events, you might want to be aware of the fact that Italy’s banking sector is teetering on the edge of collapse. Bad debts held by Italian banks make up seventeen percent (17%) of all outstanding loans in the country. This equates to about 360 billion euros or 20% of the entire GDP of Italy.
The wings of an iron condor options trading strategy consist of two vertical credit spreads; i.e., a bull put spread and a bear call spread. The process of "Legging In" offers the promise of higher yields and enhanced probabilities of options trade success, but the question is whether it is worth the risk.
Living through a track record is very different than viewing it on paper. Even the most efficient track records in history have periods where they would have been very uncomfortable to stick with. Warren Buffett has had multiple 30-50% drawdowns in his career. In the world of indexing, there is nothing magical about the S&P 500.