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 long 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.
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?
Iron Condor is a very popular strategy used by many traders and investment newsletters. There are many variables to the Iron Condor strategy. One of the most important ones is time to expiration of the options you use. The time to expiration will impact all the Greeks: the theta, the vega and the gamma.
In the first 6 months of 2014, SteadyOptions produced non-compounded ROI of 95.3% (based on fixed $1,000 allocation per trade). The return on the whole account is 57.2% (based on 10% per trade allocation). We closed 84 trades. Winning ratio was 65% and average return per trade 7%. The biggest loser was 31.8% and only 5 traders have lost more than 20%. We had 6 consecutive winning months in 2014.
Auto-trading is basically money management, but vast majority of newsletters are not licensed to manage money. Would you give your hard earned money to amateurs? I assume most people would give a negative answer to that question - yet, by participating in an auto-trading service, this is exactly what they do. Is it stupidity or ignorance? You decide.
Financial crises come around every seven years on average. There was the stock market crash of 1987, the emerging market meltdown in the mid-1990s, the popping of the dotcom bubble in 2000-2001 and the collapse of Lehman Brothers in 2008. If history is any guide, the next crisis should be coming along some time soon.
We all would like all our trades to be winners, but we know this is not possible. We know some of the trades will be losers (at least I know that, I hope you don't expect all your trades to be winners). Many traders think that if a trade has lost money, it was a bad trade. They try to identify what errors they made that lead to losses. Why? "Because I lost money! So surely I have made a mistake somewhere?”
When it comes to options trading in order to make money you need a strategy that treats options as trading vehicles in their own right and not as mere leverage tools. But a lot of people that get into options trading do not do this. I know because I wrote a top selling investment book titled Strategic Stock Trading and run the financial blogging site wallstreetwindow.com so I get emails from hundreds of new traders a month.
SteadyOptions continues to deliver outstanding gains. Our alerts produced a 69.2% ROI in the first quarter of 2014.That's over 40% return on the overall portfolio, based on 10% per trade allocation. We closed 45 trades, 32 winners and 13 losers. Check out the Performance page to see the full results.
Please note that those results are based on real fills, not hypothetical performance, and exclude commissions, so your actual results will be lower. Commissions reduce the monthly returns by approximately 2-3% per month, depending on the broker. Please refer to Performance Dissectedtopic for more details.
Perhaps the most often asked question we have heard is if now is the right time to invest. There really are no answers because the equity markets are not static. To be sure, when an investor reflects on the following questions, perhaps they can answer for themselves:
I'm asked many times which product is better to trade: Index options or ETF options? Is IWM better than RUT? Is SPX better than SPY? There is no simple answer to that question. If one product was superior to other, the other would not be trading anymore. There are pros and cons to each product, and this article describes different aspects of trading Index options vs. ETF options.
