Our regular readers already know that pre-earnings straddle is one of our favorite strategies. The idea is to buy a straddle few days before earnings and take advantage of increasing IV (Implied Volatility) before earnings. IV usually increases sharply a few days before earnings, and the increase should compensate for the negative theta.
Tesla reported earnings this week, and the stock took a hit due to weak guidance. The bears will tell you that this is the beginning of the end. The bulls will see it as a buying opportunity. No matter how you see it, there is no doubt that this is a very risky stock, both for the bulls and the bears. As a non-directional traders, we don't really care. I would like to present a less risky way to trade TSLA, with a good chance to make money no matter what the stock does.
Options trading represents a world of investment opportunities to traders and investors. In basic terms, an option is a contract/deal which lets a person to buy or sell an underlying asset before or on the specific date and at a specific price. A trader can trade options by two ways; either by buying a certain asset at a specific price within a specific time period called Call Option or by selling an asset at certain price and within specific time called Put Option.
Since I started an options trading newsletter over 3 years ago, I met a lot of interesting people. I also learned a lot about human psychology. Maybe the best way to get this across is to imagine -- hypothetically and absurdly -- if other industries got away with stuff Wall Street does. I would like you to take a look at this article. It provides some good perspective about Wall Street and human emotions.
Today we closed our VIX calendar trade for $0.80 credit, after opening it just two weeks ago for $0.25 debit. What percentage gain did we make? This is not a tricky question. Well, maybe a little bit. Any high school student would tell you that 0.80/0.25=220% gain. Correct?
While most major indexes continue to straggle, SteadyOptions continues to deliver strong gains. SteadyOptions flagship service produced 121.5% ROI in First Half 2015, based on fixed $1,000 allocation per trade (non-compounded) and 6 trades open. This translated to 72.9% return on the whole account, based on 10% allocation per trade. The winning ratio was a remarkable 82%. Check out the Performance page to see the full results.
In simple terms, implied volatility is the amount of stock price fluctuations. Understanding implied volatility changes can enhance the chances of success. In general, implied volatility increases when the market is bearish and decreases when the market is bullish. This is due to the common belief that bearish markets are more risky than bullish markets.
Trading options without understanding Options Greeks is like flying a plane without the ability to read instruments. Unfortunately, many traders do not know how to read the Greeks. This puts them at risk of a fatal error, much like a pilot would experience flying in bad weather without the benefit of a panel of instruments at his or her disposal.
Fama/French (2008): Momentum is "the center stage anomaly of recent years…an anomaly that is above suspicion…the premier market anomaly." This article will share a simple example of the power of momentum investing, and more specifically, the power of combining relative strength momentum with absolute momentum.
Whether you are new to trading or just looking for more consistency in your trading activities, this eBook will show you several ways that you can leverage a small account to your benefit. These techniques have helped me in the past, and today I want to give you a complimentary copy of this new must-read eBook, How to Trade a Small Account.
Options are similar to other financial security tools just like bonds, stocks, mutual funds, which can be purchased and sold at one’s convenience. Since these are less expensive than others, options have spread their roots across the market. These are ideal for short-term, as well as, long-term and are hence more profitable for users.
In one of my previous articles I described how we are going to play the current earnings season. I shared our plans to trade some of our favorite names (NFLX, GOOG, FFIV, CMG, FB, AMZN, MSFT, LNKD, TSLA and more). I expected this period to be good for SteadyOptions members. This earnings season was not good. It was outstanding!
