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  1. Today
  2. jvo

    Thoughts Appreciated!

    @Ringandpinion @zxcv64 @Kim @ChrisE absolutely outstanding replies and insight. Thank you for taking the time to shed some light. With the QQQ/SPY trades being "scalable" do you mean it is scalable to increased contracts due to large liquidity, or scalable in terms of upping to say SPX?
  3. Yesterday
  4. ChrisE

    Thoughts Appreciated!

    Excellent question and answers! I've been a former SO subscriber on the "all services annual" bundle, and I've spent the first 3 months or so learning the strategies and trying to replicate the returns of the official portfolio. This is my first post in a few years (I guess this is why my message "will need to be approved by a moderator" despite having built reputation/community points, @Kim?). Your question, @jvo, and your answers, @zxcv64 and @Ringandpinion, really resonated with me and my own personal situation: I'm also based in the UK (cheers to our government crisis @zxcv64!), but I have a full-time day-job as a research academic tenured at a University of London College. On top of that I run 2-3 businesses as side projects. Focus and time is the problem... Will the SO strategies make you money? Yes, but if, and only if, you consider them a job with quite a learning curve that needs constant engagement and, indeed, focus. Kim et al. are excellent at pointing out that this is not a "get rich quick" scam, but a "work a lot, and eventually you'll reap the fruit of your seeds (i.e., skills) and the context/fertile grounds (i.e., the community and its members)". Like always, if you're a seasoned veteran it'll be easier for you to set up and monitor the trades, and each individual trade will take less of your focused time as things will become (almost) second nature. Compare the day you took your driving exam with how you drive today or after having driven for a few years... Stuff will get visceral as in any profession you spend years on training for (gosh, those SO friends who, like myself, were stupid/keen enough to invest 4-5 years into a PhD know what I mean...). So then why am I a "former" SO subscriber? Because I am realistic about the time it takes to dedicate proper attention to learning and mastering the craft. Right now, my academic career and side-projects take precedent over the returns I could achieve by trading full time. But this depends very much on your individual circumstances. So it's a matter of managing your most scarce resource, which is time. Particularly focused time for deep work. At present and for me personally that's best dedicated to doing research and writing papers for top-tier academic journals. But this may change in the future, and then I'll be back. It's really not about the money: breaking easy on the $1k p.a. for the SO membership should be easy for anyone willing to learn and dedicate due time and resources (given you trade a reasonable small/mid account of $25-50k+, more won't hurt if your money management / risk allocation allows). The problem for me personally is simply that, given I know I have decided to not invest this time into SO and other trading strategies at present, the membership would be just wasted money (no offense, Kim). All things considered, taking SO seriously will require flexibility to adjust to some extent to earnings schedules, exchange opening times, time zones, trading setup (multi-display, additional software [OptionNet etc], data feed subscriptions, volatility databases etc...) . Without that it's just the futile attempt at "getting rich quickly". We must not underestimate that there's a lot of full-time pros in this game, and I personally know some of those guys who are (literally) almost "living" in the trading rooms of Canary Wharf and the City. If you want to compete with them, you must come prepared and do your homework. If you're able and willing to make these decisions in your life: I doubt there's a better, more supportive, more transparent/ethical community than SO (disclaimer: at least when I was paying member). Sure Kim wants to make money of subscriptions as well, but that's alright. SO offers you a stage. But learning how to perform you have to do yourself (with guidance, obviously). Ah, it feels good writing in an SO forum again for a change! 🙂 All the best and always good trades! Chris
  5. That’s not to say, however, that investing does not come without its challenges. Regardless of which market you chose to get involved in, from Crypto to Real Estate, the market can spiral at any time, and sometimes without warning. As such, it's important that you weigh your options carefully ahead of time so that you’re able to make smart, measured investments. Photo by Austin Distel on Unsplash With that in mind, here are some things you might want to consider before getting involved in investing. Understand how to make a trade. It goes without saying that you should at least have a basic understanding of how to trade before making an investment. After all, failing to do so means that you’re entering the market ‘blind’, meaning you’re more prone to making mistakes that could cost you further down the line. As such, you should do plenty of research ahead of time, both on investing in general and the specific market you’re looking to get involved in. Our blog is packed with investment advice and market studies that you may find useful. Learn the appropriate terminology. Another way in which you can protect yourself when getting involved in investing is by learning the investing terminology every investor must know ahead of time. For example, you must know your APR from your APY, and your diversification from your dividend. Failing to understand the jargon could land you in a difficult situation, as it means you don't quite understand what you are doing. By brushing up on terminology, you’ll also learn more about what you are actually investing in. For example, as it's a digital investment, many potential investors don’t really know what cryptocurrency is. Consider your options carefully. Before investing any money, you should also ensure that you consider all of your options carefully. For example, if you’re planning on getting involved in the crypto market, there are hundreds of different ‘coins’ for you to consider (with more launched each and every day). Ideally, you should consider a handful of different cryptocurrencies, and weigh up the benefits of each one carefully. For example, you might want to consider the dogecoin advantages, such as no-third party control, low price per token, historical data, and great upside potential. Know your myths from your facts. One of the biggest reasons why people chose not to get involved in investing is due to the fact that they’ve overheard some common investing myths and have taken them as fact (new highs mean the stock market is bracing for an imminent crash, you need a lot of money to begin with to get involved in investing). To be blunt, there is often a lot of scaremongering in the investment market, especially around new investment opportunities. The easiest way to separate fact from fiction is, unsurprisingly, to carry out the appropriate research, ensuring that you only source information from reputable sites (and not some stranger’s Twitter account). Know how much you can afford to lose. If you’re looking to trade like a pro, you must first understand your current financial situation. That is, you must ensure that you never invest more money than you can afford to lose. Ideally, you should be in a relatively secure financial position before starting - as investing is a tool to boost your income, not resurrect it entirely. While advice varies across the board, you should set aside a set amount of money each month which, if it were to vanish entirely, you would not miss (i..e it would not set your bank considerably). If you are still unsure, a financial advisor may be able to offer your records and provide you with some guidance. Understanding investing is ‘a risk’. Investing, even in a market that appears relatively stable, will always come with an element of risk. As such, it's essential that you understand this before you invest your hard-earned cash. Thankfully, there are various ways in which you can reduce risk, such as by hedging or diversifying your investment portfolio, working with investment brokers, or trading only with reputable companies. The latter is particularly important when you consider the sheer number of investment scams reported each year. This is a contributed post.
  6. Ringandpinion

    Thoughts Appreciated!

    I would like to add emphasis to @zxcv64's comment about focus. I go to some new property I have every Friday to play around and try to get my trading done before 10am (CST) so I can leave. So far, I have made mistakes because my focus wasn't really on trading Friday morning, I've been assigned 3 times in the last 2 months simply from overlooking something I should have rolled or closed. So focus is the big issue. Focus, focus, focus. But I don't think what you want is impossible, you just have to be super organized (which you probably are if you own a business) and of course subscribe to the small business man's mantra "I'll sleep when I die, there's too much to do right now".
  7. zxcv64

    Thoughts Appreciated!

    @jvo, I was thinking along similar lines when I signed up 6 years ago. My thinking was "If I just use it as an alert service and make half the annual returns of SO, then I'll still get around 50% a year. Wow, that would be cool." Sadly, it's not as simple as that. I understand your situation and time constraints (yep, I had a business, two young kids, involvement in charities etc etc so I've been there myself). From my personal experience, it's not quite so easy as entering a trade after you get the alert. There is a certain amount of management time involved and more importantly, an understanding of why the trade was placed in the first place, what to do if the underlying moves/doesn't-move, and how/when to exit. And some trades are harder to enter than others. To give some context, here's my situation - I travel overseas for about 4-5 months every winter (leisure), sometimes to countries where the time zone is EST + 12 hours. When I'm in the UK (home country), I trade full time, and this is my main source of income. Most of my trades are my own ones, and I would say I'm pretty familiar with the SO way of trading. You would think that when I am away, I would be able to spend an hour every day and still be able to trade quite a lot right? And maybe make quarter of the profits that I would expect when back home in the UK. Sadly, time and again, I've found that this doesn't work for me - my focus simply isn't there. There are times when I am out and about when the market moves for/against me and I miss out on closing trades; or when I'm simply not in the zone enough to be able to trade well; or my thinking is foggy and I make careless mistakes. I'm not saying it cannot be done - it certainly can. I'm sure there are members here who do it very successfully. The good news is this : 1) you have quite rightly spotted that QQQ/SPY trades are being not as time critical as the straddles/calendars. In fact, every week, I enter the combo trade much later than the official, and in most cases have gotten a better price. And these trades don't need as much "keeping your eyes on the ball". These would certainly fit in with your lifestyle. And they're very scalable. 2) As most of SO trades are earnings based, and these are concentrated within a 6-8 week period, you could possibly focus your trading on these times only. So, for this cycle, you would be active say between 15-Jul to around end of August. This trading window is repeatable, cycle after cycle. If you can do a 6 weeks on and 7 weeks off, then that would be ideal. Good luck!
  8. jvo

    Thoughts Appreciated!

    I posted this in the newbie forum too, so apologize for the double post. I am a current SteadyOptions subscriber and would really appreciate some insight.. I may be in a tad different situation than some members, but perhaps some could shed some light... Right now, I am 32 years old with the goal of being financially independent in 15 years or less. I currently have most of my investments in very low cost index funds. My goal with this service would be to "push the envelope" seeking higher returns with a basket of my investment capital that I would then funnel the returns back into my long-term buy and hold type investments. The rub is, I personally do not have the ability to go in super depth with the strategies and learning them being I own my own business and have two young kids, etc. So, I actually would be looking at utilizing steady options as the dreaded "alert service" as Kim has pointed out as not being the best way to utilize the service :) I have looked into a great deal of the SteadyOptions content, and I feel strongly that special things are going on...again, the problem being that I want to be part of that success, but literally need to follow along i.e. piggy-backjng the trades that are released and not attempting to go it on my own. So, I would really appreciate brutal honesty on a few of my questions: 1) Can I be profitable by jumping on and piggy-backing on the official trades? I understand that my returns would very likely be less... I usually can get the trades placed within an hour of release. 2) Perhaps, certain strategies would be better to utilize if I needed to go this route? I am thinking the weekly SPY/QQQ trades may be possible to get similar fills? 3) I know I am not utilizing the service to its full potential by just following along with the posted trades, but with my time constraints along with the goal of utilizing returns to funnel right back into my long-term investments, is this just too much "pie in the sky" thinking on my part? Again, I know this service is special, and would really appreciate opinions on if what I laid out above could work, or if that doesn't sound like a strong possibility of success. Thank you!!
  9. Last week
  10. vvn

    Trading platform

    Thank you.
  11. Ringandpinion

    Trading platform

    Interactive Brokers allows more than 4 legs in a single trade, I don't know about others. I'll always champion thinkorswim, warts and all. But they don't allow more than 4 legs either. However, I like leaving the higher strike short call as a separate sell on these combo trades, you can sometimes get a little better price by working the chart a little.
  12. vvn

    Trading platform

    Hi Which trading platform do you all use? I am a new member that joined recently, my broker Fidelity doesn't have 5 leg options. I don't know I need to open another account somewhere else. Can any one respond? Thanks VVN
  13. cwelsh

    Welcome to Anchor Trades

    Do you know where/how to get the SPX weekly data with intraday time stamps or where? The oldest data I have for weeklies is back through 2012. And yes, I've tested Anchor going back that far. I also did a "light" test with monthlies going back to 2007. The diagonal piece doesn't work, but the rest of the trade does. If we assume (as held for 2012-present) you on average pay for 80% (just a bit higher) of the cost of the hedge each year from the diagonal, then you can "assume" performance going back to 2007. And Anchor did great through 2007-2011 as well.
  14. cwelsh

    Welcome to Anchor Trades

    It is much more profitable over the long run, with less risk, than index investing. I don't index invest at all anymore -- virtually the entirety of my stock allocation (less a small amount I keep for opportunities and small account I trade SO in) is in Diversified Anchor. Anchor normally performs much better in market drawdowns than has been seen in the first 15% of this market decline. We dug into why, and the answer is easy -- this is EXTREMELY low volatility for a market drop of this size. Normally when the market is down over 20% (as it is currently) you can expect VIX to be over 40, if not even higher. We're currently in the 25 range. This directly impacts Anchor as we have not been getting the bump on the long calls and long puts in value from the increase in volatility. Because we didn't get that bump, we got to ride the market all the way down until we hit delta parity on the long put and call. I predicted that if this happened in a low vol environment, Anchor would stop seeing losses around 12.5% or so. Unfortunatey that number is closer to 15%-17%. HOWEVER, this last month has proven spectacular. I don't have all the numbers in yet (still waiting on brokerage statements), but I had a client just make me price the EFA Anchor performance. From May 1 to the present, EFA was down 8.7%, EFA Anchor was only down 2.1%. We beat the "EFA Market" by over 6.5%. If we go down a bit more, we'll hit the point where we can increase leverage without increasing risk -- so we'd benefit more on the upside. In fast crashes (like 2020), Anchor crushes the market (hedging plus volatility) In large up markets (2019 and end of 2020) Anchor beats the market due to its leveraged In slow down markets, Anchor pretty much tracks the market until the "max pain"point is reached, then it beats the market (this number, depending on a lot of factors should be between 15% and 20%). In times of normal volatility during declines, it should be in the 10% to 12.5% range. In slow up markets, Anchor should match or slighlty lag the market (again depending on a large variety of factors). In a slow SMALL decline, Anchor will lag the market. There are a few other conditions where Anchor lags -- if you have a slow down sawtooth market, Anchor can REALLY underperform. (market goes down 5% then up 4% then down 5% then up 4% etc, for six months or so). The market could be flat to down 2% and Anchor could easily be down 10% or more. (This market condition has never existed in the US for an extended period, but it has in some other markets, so I expect it to eventually happen). But even if we lag 8% one year out of 10, are even 2 of 10, then beat it the other 7, we crush it over time -- all while remaining hedged with lower risk. Sure, I wish we weren't down 17% on the year right now. (Also due to us refusing to take a loss on the diagonal for too long, that hurt about 2%). I would be "happy" at -12.5% given this market. And we have a great new staff member, Roy Revere, who is working on optimizing the diagonal rolls through all market conditions as well. There is always room for improvement --- but I'm still VERY happy with the strategy and will keep trading in my account.
  15. Kim

    Introducing a "Risk Free" Trade

    I believe some members tested it with SPX and most of the time the results were very close. Should be the same with NDX.
  16. Angelo Palai

    Introducing a "Risk Free" Trade

    Hi Kim. Can I clarify that the strategy can be extended closely, if not exactly the same, to SPX and NDX for larger accounts?
  17. vasis

    Welcome to Anchor Trades

    Seems to me SPX weeklies appeared in 2005 and were introduced by CBOE. It should be enough to make backtesting over 2007-2010 declining market. Another approach might be price approximation using implied volatility + theoretical price (from Black Sholes or more advanced models) + price of monthlies. For me, Anchor scheme is quite expensive over high volatility downtrends market when the price of hedge is high. The backtesting will show - is it still more profitable than the index in the long run or not.
  18. Kim

    Welcome to Anchor Trades

    Weekly options were created in 2010, so it was not possible to trade the strategy before 2010.
  19. vasis

    Welcome to Anchor Trades

    Totally agree, but it would be much better to understand max drawdown during "bad conditions market" (deep and duration) - this is why I asked before about backtesting over declining market 2000 - 2012. You know selling naked puts is an "excelent" strategy which can give profits 5-10 years and die in several days.
  20. Kim

    Welcome to Anchor Trades

    Anchor behaves exactly as designed. No strategy can outperform in all market conditions (except for Madoff maybe), but those who followed the strategy from the very beginning are still crashing the S&P 500 with less volatility.
  21. Let's start by running a scan on stocks reporting earnings this week, which includes the total option volume indicator, sorted from greatest to least. Focusing on Micron Technology, as we click through, we see this large-cap company in the semiconductors industry reports earnings on Thursday, June 30th, after the close. The earnings and financials tab takes us to more detail showing the options market expecting a move of 7.3% in either direction. This move was breached in 4 out of the last 12 earnings. During that time, the post-earnings move was outside of the implied range 6 times. In those cases, long straddles were profitable. The rest of the earnings moves likely yielded profitable short straddles. We can overlay quarterly financial data by clicking on the ratios below the earn move graph. Let's look at the PE ratio, which is the stock price divided by the trailing twelve months earnings per share. For MU, the current PE ratio is 6.4, which is 50.5% under the average for the last twelve earnings observations. Returning to the overview tab, we can quickly run a scan to find the best option trades. Since earnings are right around the corner, we scan for neutral strategies, then filter the scan results by S%, or smoothed edge, by setting it between negative and positive 3%. This helps narrow the results to trades that are fairly priced. The highest ranked trade is a Iron Condor with strikes at 44, 50, 61, and 67, expiring on 2022-07-29, for a credit of $2.08. By pulling up the trade, we can see the theoretical values in more detail. The distribution edge, found by the expected value of the payoff picture on the stock's historical distribution, has an edge of 25.2%. The forecast edge, which is derived from historical volatility, has an edge of 20.9%. Lastly, the smoothed edge, which is calculated by drawing a best fit curve through the monthly implied volatilities, has an edge of 1.0%. The edge is relative to the mid-market price of the trade. Greater positive edges are a theoretical benefit to the trader. We can also look at the payoff graph. The probability of profit sums the probability of the nodes for the part of the payoff picture above the zero profit line over three standard deviations. For this trade the probability of profit is 72.98%. The reward to risk divides the max gain by the max loss. Here the 1 to 1.9 is the ratio of the max gain of $206 to the max loss of $-394. There are two break evens for this Iron Condor at 47.94 and 63.06. The total Greeks and ThinkOrSwim code complete the information on the trade analysis popout. Next, let's look at this trade in the trade builder. Over the last month, the stock price fell 25.8%, while the thirty-day implied volatility rose 22.9%. The average slope of the trendlines is negative. The heatmap on the right side of the graph is green where volatility and slope are undervalued, and red where they are overvalued. In this case, short term IV and slope are neutral, while the long term is overvalued. We can also see this trade overlaid on the monthly implied volatility graph in the chain tab. The legs for this trade are circled. For any questions or issues with the article, please contact otto@orats.com. To subscribe to the dashboard, please visit https://orats.com/dashboard About the Author: Matt Amberson, Principal and Founder of Option Research & Technology Services. ORATS was born out of a need by traders to get access to more accurate and realistic option research. Matt started ORATS to support his options market making firm where he would hire statistically minded individuals, put them on the floor, and develop research to aid in trading options. He is heavily involved with product design and quantitative research. ORATS offers data and backtesting on a subscription basis at www.orats.com. Matt has a Master’s degree from Kellogg School of Business.
  22. Ringandpinion

    Member of the Month

    See what happens when I'm out of touch for just 1 day. Thanks for the help @project, every bit of knowledge is useful , especially about volatility trading, your write up on that was great.
  23. Earlier
  24. deepvalue4ever

    Member of the Month

    Well deserved @project! I've learned a lot from your posts! Keep up the good work.
  25. mccoyb53

    Member of the Month

    Well done @project. Your contributions are much appreciated.
  26. project

    Member of the Month

    Wow, thank you. This really comes as a surprise.
  27. rasar

    Member of the Month

    Thanks for the good contributions, @project.
  28. Kim

    Member of the Month

    Member of the month award for June goes to @project for his excellent Implied Volatility posts.
  29. Kim

    Introducing a "Risk Free" Trade

    As you can see from the chart, the credit is around $50, and the margin is around $800, so the potential gain is around 7% if all options get to the point of zero time value. The credit in our recent trades was ranging between $25 and $80. The gain could be higher if the stock ends up under the tent and IV does not change, and could be less if IV goes down. Maximum gain so far was 15% and maximum loss 11% (this happened when IV went down and the stock ended up in the worst possible spot. To clarify: If the required margin is $800 and the credit is $50, then the risk (or the capital requirement) is $750. So if the options expire worthless, and we keep the $50 credit, then the gain is 50/750=6.66%. As a side note, we rarely let all options expire, typically we would close them on Thursday or Friday the latest.
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