SteadyOptions Trading Blog

Here’s a fun thought experiment. Suppose you had $15,000 to invest evenly in fifteen different companies back before the Great Recession. Then you let it ride through the market’s downturn, holding your investment instead of selling anything. How much would you have today?

One of the most common criticisms of any kind of investing is that it can be viewed as being akin to gambling. There’s nothing wrong with this given that investing in various forms is a perfectly legal and regular activity. 

One of the interesting features about options is that there is a relationship between calls, puts, and the underlying stock. And because of that relationship, some option positions are equivalent – that means identical profit/loss profiles – to others.

For those not familiar with the long straddle option strategy, it is a neutral strategy in options trading that involves the simultaneously buying of a put and a call on the same underlying, strike and expiration. The trade has a limited risk (which is the debit paid for the trade) and unlimited profit potential. 

We last wrote about Oracle on 2017-09-03 with this same back-test -- a 3-day momentum swing trade ahead of earnings and it has followed through for 8 consecutive pre-earnings cycles with a 290% total return during that historical period. Oracle's next earnings date is 12-14-2017, but this not is not yet confirmed. 

Netflix (NASDAQ:NFLX) has earnings due out Monday, October 16th, after the market closes. Seven calendar days before then would be 10-9-2017. It is time to look at the company's remarkable history of momentum into earnings events and how we can use it with options trade. 

This question is not related exclusively to options, but, given the time decay element built into them, it may be particularly relevant to them.The question is this: are there any general rules that you use for exiting trades that start to go against you, especially if they are not based on an anticipation of a specific catalyst?

Microsoft has earnings due out on October 26th, 2017, after the market close, according to Wall Street Horizon. 7-days before then would be October 19th, 2017. Microsoft is the forgotten mega tech -- the third largest company in the world behind Apple and Alphabet, but it doesn't fall into any fun Acronyms, like FANG, or FAANG. 

Options Greeks measure the different factors that affect the price of an option contract. Unfortunately, many traders do not know how to read the Greeks when trading. The following infographic will explain options pricing factors and the Options Greeks: theta, delta, gamma vega and rho.

A lot of options traders consider 90% probability strategies a Holy Grail of trading. After all, if you can win 90% of the time, you should be able to grow your account very quickly, right? Well, not only this is not true, but in fact, winning ratio alone tells you NOTHING about your chances to be profitable. 

For Facebook Inc (NASDAQ:FB), if we waited one-day, and then sold an one-week at out of the money iron condor (using weekly options), the results were quite strong. This post earnings options strategy opens two calendar after earnings to try to let the stock find equilibrium after the earnings announcement.

The iPath S&P 500 VIX Short Term Futures TM ETN (NYSEARCA:VXX) is referred to as "the VXX.".  The obligation of the VXX trading strategy is to match the performance of the S&P 500 VIX Short-Term Futures Index Total Return and it maintains positions in the front two-month Volatility Index (VIX) futures contracts.