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  3. NOT, It's Just the next step.
  4. Thank you for your comments. I'm usually referring to calendar days. But this is really just an estimate. Sometimes we enter 2 weeks before earnings, sometimes just 1-2 days. it depends on the stock, on the prices etc. We do extensive backtesting to determine which stocks to use and how long in advance to enter. Regarding your second question - yes, sometimes weeklys are not liquid enough and you need to use monthlies. It really depends on the stock. Some stocks don't have big OI, but still are easy enough to trade even on weeklys.
  5. One more follow up! As an example, say after looking at upcoming earnings I decide to do this with eBay. Isn't the open interest and volume too low on the Feb 10 weeklys?
  6. Hi Kim, Thank you so much for the information. As a novice options trader, I learned the hard way not to hold a straddle through earnings after getting hit with IV crush for the first time(they don't teach that in undergrad business school!) I have a question regarding timing our entry into the position. You recommend 5-7 days prior to earnings. Is this actual days or market trading days? I imagine this would make a difference in our expected return. Otherwise, I plan to sell the day before earnings on stocks that popped at least 5% in the past with the option expiring 2 weeks after announcement. Anything else a novice should keep in mind? Thanks again for the fantastic articles!
  7. I have been thinking exactly the same thing for a very long time. We are hitting the 8 year mark this year and just on the basis of natural economic cycles we are in the time frame for a recession. But, what I was writing about was, what I believe,is an outlier situation (Trump). That REALLY an "unknown/unknown". But we know when it will begin at least. I think he could be a very different situation than the normal Republican/Democrat paradigms. Not to mention that we have had 2 8 year massive bull markets under the last 2 Democratic Presidents (Obama, Clinton) and a bear mkt under both Bushes. The bigger point is that a time of so many unknowns, and potential outliers, IV and VIX is at it's lowest point in history. So it is not like buying IV and holding it through earnings. Because , during those times, you are buying the most over inflated IV, and it WILL crash after earnings are announced. But, unlike earnings, the opposite, is buying the lowest possible IV before the event. Yes, it is true that earnings are a 1 day , binary event and with Trump, it will take some time ( could be 2 weeks or 6 months) to see what is going on for real, not in predictions. But, we KNOW it will be a massive change in direction from the past 8 years added on to the correct time frame for a recession.
  8. I believe that timing is everything. Will US fall into recession? 100% The only question is when. It could happen tomorrow, or the markets could go up another 50% before the correction. Historically, we have bear markets every 6-8 years. Last one ended in 2009, so we should be pretty close to the next one. Will we follow historical patterns this time? The truth is nobody knows. Some pretend to know, but again, it's all about timing. Robert Prechter made himself a name by correctly predicting the 2008 crash, but people forgot that he has been predicting a crash every year for the last 30 years..
  9. I read and listen to a lot of economists and money managers that I think should garner some respect. David Rosenburg and Grant Williams think the market is loft and will more likely than not fall into recession. David Rosenberg especially backs this up with a slew of charts and statistics showing how the economy has changed. He was mostly correct with the bull run and the previous recession (if I recall correctly). I sat in on Jeffery Gunlach's webcast on tuesday where he talked about the economy. This guy is famous for correctly calling a lot of trends. one year ago he called the bottom of gold, and that oil would go to 50ish, and was emphatic that trump would win (note this was way before the primaries). He thinks the market has priced in lots of Trump related growth (infrastructure changes, repeal/replace ACA, tax cuts, reduced regulation, etc) that (a) takes longer than expected to enact and (b) may not be as strong as they think. He is also shocked that the market is not concerned about all the anti-trade related talk coming from Trump and how that would effect prices. He points out that infrastructure changes take years, and the tax cuts are targeting the weathy and not those likely to spend. But on the otherside, he is bearish on the dollar since Trump stated that a strong dollar makes things tougher for the economy, see's earnings rising this next year, and says unemployment is doing well. He says there is no recession in 2017, but suggests taking US equities and putting them into international equities. I see few people calling for the market running higher, many calling for a recession, and some call for sideways action.
  10. We all know what happens as we approach earnings. We know how to calculate the risk of holding through earnings and we typically do not do it because the market has to move more than a very inflated expected move. Earnings are a "Known/Unknown". I try not to have an opinion about the market as much is practical but. We have one of the biggest "Known/Unkown/Unkowns" in history coming in 1 week. The change of President, and an Administration, that is even more radical than from one party to another after 8 years. Trump is an outlier. He is beyond, just going from Democrat to Republican. The big difference between this and an upcoming earnings is that right before earnings are announced , IV is at a very high extreme. We have a bigger unknown coming in a week and IV (VIX) is trading at the lowest level EVER! It seems that this would be the opposite of buying vol and holding through earnings. In this case, unlike earnings, IV is saying it expects the market to NOT move compared to all historical precedent. And every day, as we approach the inauguration, the market rises and VIX falls. It just looks and feels like the makings of a "Bubble". We know , over the long run, it is a losing situation to inventory IV because theta will kill you while you are waiting. But, this seems like a very specific, unique situation because of the extreme of the event about to take place, and the greater extreme of the historically low prices of options all around. What say you?
  11. Earlier
  12. Wow, thanks for the quick response! Will check out the podcast.
  13. Not sure why you couldn't find it -
  14. Hi everyone, I'm a new options trader (currently only paper trading on TOS), and came across this site via I've been watching some instructional videos at, and did a quick forum search over here, to find out what experience the SO community has with this site. Strangely enough, my search brought up zero results. Perhaps this discussion does exist, but is blocked by the members-only paywall? Not sure... In any case I'd be interested in what you think about Thanks!
  15. Can you tell me what you did to get this rate? I just spoke with TOS and they said $1.50 per contract with no flat fee was the best they could do. They didn't discuss any structures that included a flat fee. Do you know if you getting institutional pricing?
  16. I would like to present two opinions by two different options experts, and let you to decide. Are Options a Zero Sum Game? - by Mark Wolfinger Most people consider options trading to be a zero sum game. When you make a trade, someone takes the other side and when one of you gains, the other loses an equal amount. From that definition it’s difficult to argue that the term ‘zero sum game’ does not apply to options, and to trading in general. However, I do make that argument. A Profit in Stocks When a trader decides to sell a specific holding when it rises to $75 per share, the trader may make a mental stop, or enter a GTC (good ’til canceled) sell order with his/her broker. When the stock is sold, the trader is happy with the result. Sure the stock may move higher, and one can argue that our trader ‘lost’ money by selling and that the ‘buyer’ made money. With this point of view, trading is a zero sum game. I’ll concede that the buyer earned money, but not at the expense of the seller. I prefer to look at it this way: Our trader earned the profit he hoped to earn, and when that happened, he/she willingly transferred ownership of the shares to another trader. Once the position is out of the account, the trader neither makes nor loses anything. Any change in the stock’s value affects only the new owner. There is no corresponding loss on the part of the trader who sold the shares. One trader made a graceful exit, accepted a profit, and now a different trader has a new investment. Options are Different Most of the world looks at options differently. But I don’t. If I buy a call option and earn a profit by selling at a higher price, there is no reason to believe that the seller took a loss corresponding to my gain. The seller may have hedged the play and earned an even larger profit than I did. The thought that options represent a zero sum game assumes that all trades are standalone plays and that if you profit, the other person must have lost. Just as our trader above decided that transferring ownership of the shares to another investor would be a good idea at $75/share, so too does the covered call writer. When I sell a covered call, I am thrilled when the stock rallies far above the strike price. It means I will earn my desired profit. Better than that — if the big rally comes soon, I will be able to exit the trade with perhaps 90% of my cash objective. Why is that so good when the last 10% is sacrificed? Because of time. If there are still many weeks remaining before expiration day arrives, I can reinvest my money into another position and use the same cash to earn even more than that 10% left on the table. It may be true that the person who bought my call scored a big win (if the trade was not hedged), but that’s not my loss. In fact, it was my additional gain (in the scenario presented). Risk Transfer Options were designed to transfer risk. In the covered call example, the seller accepted cash to help reach the target profit. By doing so, he/she willingly took cash to limit the profit potential of the trade. However, the point is that there was no potential profit to be sacrificed. The call seller would have sold stock at the strike price ($75) and earned less profit than the covered call writer, who collected $75 in addition to the option premium. The option buyer took on limited risk. If the stock did not rise far enough or fast enough, that buyer would have earned a loss. I don’t see anything resembling a zero sum game in hedged options transactions. I understand that others see it as black and white: If one gained, the other lost. But that’s an oversimplification. Debunking the Option-Trading Myth of Zero Sum - by Rachel Koning Beals There’s an urban myth in options trading that’s probably as old as the CBOE itself: It’s often said that options trading is a zero-sum game. In other words, if someone wins, someone else has to lose, right? Well, no. It’s true that the stock or option or future or whatever will go up or down, and only one of us can be right. But that assumes that each of us doesn’t do something else on the side. Let’s look at a few scenarios in a typical options trade on an underlying stock. Myth Buster One Say you buy a call, which means the market maker sells the call to you. If the stock goes up, you make money and the market maker loses money, right? Right. But there's more to it. When a market maker sells you that call, he or she might choose to hedge it immediately by purchasing the stock to hedge the short call. Now, you’re still long the call, but the market maker is short the call and now long the stock. Let’s assume the stock goes up, and your call goes up in value as well. The market maker who’s short that call is losing money on it, but is making money on the long stock. It’s possible for the profit on the long stock to exceed the loss on the short call. In that case, you make money on your position, and the market maker makes money on her position, too. In this case, you both can win. Myth Buster Two Let’s say the stock goes down. The market maker is short a call, and makes money on that because she keeps the premium received when she sold the call. But she’s long stock, too, and loses money on that—probably more than what she made on the short call. You own that long call, and you lose when the stock goes down. In this case, you both lose. The difference is that the market maker started out with the opposite of the trade you had, but she changed it into something else. A Caveat So, the options market isn't really a zero-sum game when you look at two independent traders taking opposite sides of a trade. Each can hedge or adjust their position without the other trader doing anything. The beauty of trading options is that you can make investment decisions based on market news, volatility, time to expiration, underlying moves, and so on, and/or create different option strategies to hedge your initial trade or position at any point of time. If there's a hedge involved on the "loser" side of a trade, and the net result is a win, two traders can net out as winners, and the zero sum argument goes out the window. However, if you look at all the traders and investors out there in aggregate, trading does become a zero-sum game. When the market maker buys the stock as a hedge against her short call, someone else is selling that stock to her. If the stock goes up, the person who sold the stock misses out on the profits. So, the zero-sum theory works for the grand scheme of the markets, but not necessarily on the trader-versus-trader level. Where does this leave you? Pick your trades carefully and make sure they make sense to you. Consider proper hedges with your options trades, and let the other folks worry about their own profit/loss ratios. You just have to worry about yours.
  17. I don't hate Sosnoff. I'm providing the facts only. And I don't see how Dan Sheridan connection to ONE is relevant. Dan Sheridan made an agreement with ONE to get better rates to his members. He does not benefit personally from this connection. Sosnoff does.
  18. Dan Sheridan is connected to ONE Sosnoff is connected to Tastytrade One is good and one is bad but: Sosnoff Sheridan Group is started in early 80's I cant understood your hate to Sosnoff. He is far from perfect but he is not so bad as you try to show.
  19. Performance Dissected It is important to mention that those numbers are pre-commissions, so your actual results will be lower. As with every trading system which uses multi leg trades, commissions will have a significant impact on performance, so it is very important to use a cheap broker. We have extensive discussions about brokers and commissions on the Forum (like this one) and help members to select the best broker. Commissions reduce the monthly returns by approximately 2-3% per month, depending on the broker. Please refer to Performance Dissected topic for more details. We had few rough months in 2016. The main reason is that we started implementing a new strategy that holds trades through earnings. This is a high probability high risk strategy that had very good historical results and probability, but did not work well in 2016. You can read more details here, including the lessons we learned. This strategy was responsible for majority of the losses in Feb-Apr. 2016. Once we realized that the strategy doesn't work well and is higher risk than most members would like, we abandoned it and went back to our time proven strategies. It took us just 5 months to recover, and our model portfolio doubled since April lows. Members who had the discipline and patience to stay the course have been greatly rewarded. To put things in perspective, it was our worst drawdown in 5 years. Despite our best efforts, drawdowns happen in trading, it's part of the game. Despite this drawdown, we still delivered 5 years CAGR of 82.5% (including commissions), while investing only 50-60% of our capital on average. It is important to understand that Drawdowns Are Part Of The Game. All big winners including AAPL, AMZN, GOOG and MSFT had few drawdowns ranging from 65% to 92%. If you sold them, you would not enjoy the gains that followed. Our strategies SteadyOptions uses a mix of non-directional strategies: earnings plays, Iron Condors, Calendar spreads etc. We constantly adding new strategies to our arsenal, based on different market conditions. SO model portfolio is not designed for speculative trades although we might do some in the speculative forum. SO is not a get-rich-quick-without-efforts kind of newsletter. I'm a big fan of the "slow and steady" approach. I aim for many singles instead of few homeruns. My first goal is capital preservation instead of doubling your account. Think about the risk first. If you take care of the risk, the profits will come. We continue expanding the scope of our trades beyond the earnings trades, Iron Condors and calendars. We are trading SPY, TLT, VIX and other ETFs to diversify the portfolio. We will continue refining those strategies to get even better results. This gives members a lot of choice and flexibility. Looking at specific strategies, pre-earnings calendars were our best performing strategy, producing 18.2% average return with over 80% winning ratio. We will continue trading what works the best and adapt to the market conditions. What makes SO different? First, we use a total portfolio approach for performance reporting. This approach reflects the growth of the entire account, not just what was at risk. We balance the portfolio in terms of options Greeks. SteadyOptions provides a complete portfolio solution. We trade a variety of non-directional strategies balancing each other. You can allocate 60-70% of your options account to our strategies and still sleep well at night. Second, our performance is based on real fills. Each trade alert comes with screenshot of my broker fills. Many services base their performance on the "maximum profit potential" which is very misleading. Nobody can sell at the top and do it consistently. We put our money where our mouth is. Our performance reporting is completely transparent. All trades are listed on the performance page, with the exact entry/exit dates and P/L percentage. It is not a coincidence that SteadyOptions is ranked #1 out of 704 Newsletters on Investimonials, a financial product review site. Read all our reviews here. The reviewers especially mention our honesty and transparency. We place a lot of emphasis on options education. There is a dedicated forum where every trade is discussed before the trade is placed. We discuss different strategies and potential trades. Unlike most other services that just send the trade alerts, our members understand the rationale behind the trades and not just blindly follow the alerts. SO actually helps members to become better traders. Other services In addition to SteadyOptions, we offer the following services: Anchor Trades - Stocks/ETFs hedged with options for conservative long term investors. Steady Condors - Hedged monthly income trades managed by the Greeks. LC Diversified Portfolio - broadly diversified, absolute return, multi-strategy portfolio. The LCD is our most diversified and scalable portfolio, I highly recommend that members check it out. It is offered as an added bonus of all subscription plans. We also offer Managed Accounts for Anchor Trades and LCD. Let me finish with my favorite quote from Michael Covel: "Profits come in bunches. The trick when going sideways between home runs is not to lose too much in between." Subscription is now open to new members for a limited time. If you are not a member and interested to join, you can click here to join our winning team. When you join SteadyOptions, we will share with you all we know about options. We will never try to sell you any additional "proprietary systems", training, webinars etc. All our "secrets" are included in your monthly fee. Happy Trading from SO team!
  20. Signs are beginning to emerge of higher inflation, and businesses are also going to stall on investment decisions. Economists who said they expected growth to be the same than in 2016 were in the minority. Signs that the economy is beginning to suffer are gathering. Because of a slowdown in economic activity, the British pound depreciated against other major currencies. In spite of this, major British exporters such as BP will benefit from the declining pound. This is because their domestic costs will be lower, and simultaneously the value of their exports will increase. Because of the unprecedented nature of Brexit, it's not entirely clear how economic events will unfold. Brexit - a risk to Business? Chief Financial Officer's or CFOs are going into 2017 with concern, seeing the effects of Brexit as the main risks to their businesses. Despite strong retail sales, consumers in the UK are also looking to enter 2017 with less optimism and negative view of inflation. But what about the stock markets - how are they being affected? Uncertainty about future access to the common European market will likely delay their major investments in the UK. A Reputable Broker to Guide your Moves Anyone interested in trading knows that Brexit is a major market risk event, and many market outcomes look possible. As a trader, new or seasoned, you want to be affiliated with a reputable, regulated broker such as CMC Markets who can guide you through volatile times with price spikes and major trending moves. A currency broker can be of value to a company in volatile times and when developing their currency strategy. If you run a business and it purchases goods from a country like France for instance, one of the challenges of a post-Brexit economy will be adjusting finances as you will now require more pounds to buy less products. Before you transfer money through your bank too, you're aware that the exchange rate offered by the bank is high, but this is because banks generally add to an exchange rate before exchanging money. Currency brokers, on the other hand, focus entirely on currency, so unlike the banks, they're able to offer more competitive exchange rates. A move to Safe Havens Investors started to want to protect themselves against the worst possible outcomes, moving their capital into 'safe haven' assets, such as gold, U.S. Treasury bonds and the Japanese yen. This move to safety resulted in sharp increases in value of all the assets. The economic impact of Brexit on the U.S. stock isn't straightforward and all major U.S. indices declined by about 5%. This is because many investors traded their holdings of equity for safer Treasuries. Within just a few weeks the S&P 500 index reached an all-time high. Decisions, Decisions As s the months pass, the economic consequences of Brexit become more about real economic activity and less about financial market disruptions. In the UK, uncertainty will be over every business’s decisions on whether to hire people or make capital investments. If you’re an American company with its European headquarters in London, investors will want to know whether they should stay calm or start checking out prospects in Frankfurt for instance where the relationship with the E.U. is more settled? Know your Currency Strategy Brexit has made many new as well as seasoned traders aware of their lack of currency strategy?Most times a business that sends and receives payments internationally takes part in a currency analysis which will allow the company to look at past international transactions to assess how effective their currency strategy is. With a currency analysis, you can see whether your company had unnecessary costs or losses. The best broker companies have award winning trading platform with the latest trading tools. You'll be able to assess many international transactions with their Currency Analysis Tool. There is no no doubt that in the light of Brexit, the first step for any trader is being proactive - linking to the right broker and not allowing your business to suffer.
  21. Turns out tastyworks $1 commission is not exactly $1. There is an extra 0.15 clearing fee and regulatory fee. So total to open and close position is $1.30. With IB it's around $1.50 on average, and many times you pay less for adding liquidity. Which means that overall cost with tastyworks will be similar or even higher than IB. And this is before even mentioning higher margin rates, higher commissions for stocks etc. So much for "no hidden fees"..
  22. Another example of "quality" of tastytrade "studies".
  23. I agree with you and I have had many conversations with Tom, debating many of these ideas. But, as opposed to all of the charlatans moving around in this space...where does Tom gain "Financially" from pushing a stupid theory.(i,e, NEVER buy premium) Especially when he is generally on the right track ( IV is overstated, always have more of an edge as a seller of premium.etc.). It looks to me like it has it's roots based in "ego" rather than financial gain.
  24. he has two videos on his youtube channel about calendars. One goes over why no one should ever trade calendars, Then a couple years later they published one centered around how effective calendars are in low vol environments I feel this kind of provocation is effective as entertainment but doesnt carry much weight otherwise. His studies all employ very small sample sizes rendering their results iffy at best. He also outright disparages systematic trading, especially trend following despite the vast amounts of empirical evidence supporting the efficacy of both. That being said, I think some of his options basics videos are very helpful. Despite all of this, my issue is the opacity around his TDA relationship and how close minded he is toward any approach other than his own. In my experience, anyone who thinks their way is the only way is either full of shit, peddling something, or both.
  25. correct, I havent. But im not referring to tasty works.
  26. Yes, this is the study I was referring to. He actually did similar studies more than once. Here is another one - Another garbage study from Tasty Trade. I have no idea what percentage of his studies is good. I would assume that more than 50% for a simple reason: selling premium in general has an edge compared to buying premium, and since all his studies are about selling premium, he must be right more often than not. But as you said, the fact that he claims one should NEVER buy premium is absolutely idiotic, and he has zero credibility by claiming such idiotic claim. I never said he is a fraud. I said he is a hypocrite and has conflict of interest. Doesn't make him a fraud. "how does he make money from trying to perpetuate that idea?" There are two different aspects here. First aspect is his conflict of interest because he recommends active trading strategies that are commissions consuming and at the same time, benefits financially from those strategies, no matter if they make money or not. This is on the business level. btw, he is not alone - Najarian brothers do the same with TradeMonster/OptionMonster, and TDAmeritrade are doing the same with redoption. But at least they don't claim that their goal is to "help the small guy". Second aspect is his claim that only options selling can make money. This is on the professional level. To me, this claim alone discredits the whole Tastytrade network because you can never know if their studies are correct or are skewed to support his concept. He did it with buying premium before earnings, I'm sure you can find many other instances. It doesn't matter what percentage of the studies is correct because novice traders will never know the difference. If he lied and skewed his study (intentionally) once, how can he ever be trusted again??
  27. He once did a study about "Buying premium before earnings" and it was one of the most stupid presentations I have ever seen. He did the study in reverse. He decided that he wanted to make a point (you can't make money buying premium before earnings) , THEN, he went out and had his research team "cherry pick" a series of events, which he already knew the outcome of. Then, lastly, they ran a study to prove their point. I agree with you on that one totally. Anyone can prove anything by cherry picking data and shape it to provide the results you want in advance. He has presented ten's of thousands of amazingly insightful studies, that ARE true, as well. I'm not going to call the guy a fraud because there is some very small % of his studies that I don't agree with. Relative to the amount of information those people are putting together, there is a VERY small % that I would place in the category of that particular study. I have never done my own study, if it were even possible, as to what % of his presentations are spot on compared to the ones that are misleading. But, the majority make sense, and have value despite the unenlightened ones. This is an industry where making money is a priority. I think stubbornly committing to the idea that one should NEVER buy premium is absolutely idiotic. But, how does he make money from trying to perpetuate that idea?
  28. I guess you havn't watched them over the past few weeks. They took several weeks to explain the entire structure of the business, how it works, who owns what etc. etc. I don't it would be possible to be more transparent. They worked together with the SEC in putting all of this together the past 3 years. Everything was perfectly in order for them. That's a pretty good approval. I don't think there is anything else they can do to be more upfront. You don't have to agree with everything they say. I certainly don't. I have had lot's of disagreements with Tom (ex. how could you realistically say that you would NEVER buy premium?) But, they are amazingly honest and fair, in a business that is mostly filled with scams (i.e. "I'll show you how to make $6784 per week, every week") They work very hard, and provide mostly quality information. Most important, they are honest.
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