SteadyOptions Trading Blog

We recently received a question from one of our members: "Is value allocation a contrarian strategy that identifies stocks that are considered "cheap" relative to historical prices?  How is value measured, and how would this strategy mitigate a pool of stocks like Blackberry in 2010 that was trading at metrics less than historical trailing averages?"

Selling short (naked) strangles is heavily promoted by some options "gurus". Is it a good strategy? It might have an unlimited (theoretical) risk, but what about the return? Is the return worth the risk? We decided to do some math, based on real prices, not some theoretical "studies".

Nassim Taleb tells a great story about Thanksgiving turkey’s in his 2007 book, The Black Swan. "Consider a turkey that is fed every day…Every single feeding will firm up the bird's belief that it is the general rule of life to be fed every day by friendly members of the human race 'looking out for its best interests,' as a politician would say.

“I’ll do anything to lose weight (except diet and exercise),” is the same kind of magical thinking by investors who will do anything to outperform the market except study and practice discipline. It takes novice investors about a year to realize that you can’t consistently beat or time the market buying individual stocks or funds.

Setting up some internal rules for your trading looks like a must first-step before setting up your account and getting into your platform. You need to get your own trading plan and then stick to it. Self-discipline and avoiding recklessness can be huge for your balance.

What makes a forex trader profitable? Looking at a wide array of real data, four patterns are found. Timing is critical. The best time to trade is not necessarily what you thought it would be, and it certainly depends on the trading style.

Simplification: We can all better understand options trading by removing the complexity so often seen in articles. One of the best ways to understand the profit potential and risk levels of any options strategy is through diagrams and a demonstration of the formula.

“Don’t tell me what you think, tell me what you own.” I’ve written articles and posts on this website about a wide variety of ideas and strategies, so in this article I’ll share my thought process of how I’ve put it all together for my own personal situation. My ability, willingness, and need to take risk is likely different than yours, possibly a lot different, so this should not be considered investment advice or recommendations.

One of the most common questions asked about the Anchor and Leveraged Anchor strategies relates to “what’s the most I can lose on the trade.”  Fortunately, that’s a fairly easy number to calculate for any one given time on a known portfolio.  A yearlong dynamic calculation is a bit more difficult. 

This is the last in a series of articles about how dividends affect option value and volatility. In picking stocks for options trading, what are your criteria? Analysis of dividends, debt and net return – all fundamental tests – help identify strong value companies (and lower-volatility options) versus weak, high-risk stocks.

As a financial advisor, investment advisor, hedge fund manager, model developer, and newsletter signal provider for over a decade now, I've had the opportunity to see quite a bit of human nature in action.

Our Steady Momentum PutWrite strategy attempts to outperform the CBOE PUT index, which writes cash secured puts on the S&P 500. An investable version of this strategy can be purchased with the ETF PUTW. The historical data for PUT extends back more than 30 years, highlighting how writing puts can be an attractive strategy.