CML TradeMachine Trade Ideas

[cuegis]

15 minutes ago, mustafaoe said:

Yes, it is. Instead of the plain Call, I prefer a bear call. It  gives some time more.

Plus the positive theta of a diagonal....also, if this is a bearish play, you would expect IV to pop, and it is also a long IV position

Edited July 25, 2018 by cuegis

[skydragon]

1 hour ago, lrfsdad said:

This Thread seems to have died off. Still haven't decided to subscribe but I took the Google momentum trade they emailed out the other day.  closed part for a small winner holding one more to see if I get the 40% Target they mentioned. anyone else take the same trade?

I decided to subscribe a couple months back.  I've been reading back through this thread for ideas, as well as reviewing the ideas emailed out by CMLviz, browsing their Discover tab, and testing a few of my own ideas.  I am overall pleased with the results - I've definitely paid for my subscription fees.

   I'm not sure which trade you're referring to in your post....    I followed this 3-week pre-EA momentum one:   http://www.cmlviz.com/research.php?number=12177&cml_article_id=20180618_alphabet-inc-has-a-remarkable-pre-earnings-momentum-trade-that-has-persisted-for-3-years    using the 1200 strike from 7/2 to 7/23, which netted me 120% gains (sweet!).

   Now I'm in the 1260 strike of this 2-week post-EA momentum trade:    http://www.cmlviz.com/research.php?number=12218&cml_article_id=20180722_the-repeating-pattern-in-alphabet-inc-that-triggers-right-after-an-earnings-beat-and-the-option-trade-that-follows     Currently it's up 10% (for the moment; after one day).  I'll probably let it run (so long as it stays healthy) for the prescribed two weeks.  We'll see....GOOGL can be a fast and wild ride.

 

[lrfsdad]

9 hours ago, lrfsdad said:

This Thread seems to have died off. Still haven't decided to subscribe but I took the Google momentum trade they emailed out the other day.  closed part for a small winner holding one more to see if I get the 40% Target they mentioned. anyone else take the same trade?

 

9 hours ago, mustafaoe said:

Yes, I did the same trade, but slight different. Instead of the call I have opened a BCS. the idea is basically the same.

 

Got out on the second leg around +40%. 

Aug 10 1247.50 calls

[lrfsdad]

8 hours ago, skydragon said:

I decided to subscribe a couple months back.  I've been reading back through this thread for ideas, as well as reviewing the ideas emailed out by CMLviz, browsing their Discover tab, and testing a few of my own ideas.  I am overall pleased with the results - I've definitely paid for my subscription fees.

   I'm not sure which trade you're referring to in your post....    I followed this 3-week pre-EA momentum one:   http://www.cmlviz.com/research.php?number=12177&cml_article_id=20180618_alphabet-inc-has-a-remarkable-pre-earnings-momentum-trade-that-has-persisted-for-3-years    using the 1200 strike from 7/2 to 7/23, which netted me 120% gains (sweet!).

   Now I'm in the 1260 strike of this 2-week post-EA momentum trade:    http://www.cmlviz.com/research.php?number=12218&cml_article_id=20180722_the-repeating-pattern-in-alphabet-inc-that-triggers-right-after-an-earnings-beat-and-the-option-trade-that-follows     Currently it's up 10% (for the moment; after one day).  I'll probably let it run (so long as it stays healthy) for the prescribed two weeks.  We'll see....GOOGL can be a fast and wild ride.

 

I did the second one u linked.  Maybe I should start reading those emails they send out.....  Thanks for the feedback and please note losers as well

[cuegis]

Is "Pro Scan"a separate subscription?

I am a subscriber to Trade Machine, but when I hit the tab on the top for "Pro Scan", when the new page comes up, I'm not able to do anything with it. It is basically the same as if everything were "greyed out".

[skydragon]

On 8/5/2018 at 8:38 AM, cuegis said:

Is "Pro Scan"a separate subscription?

I am a subscriber to Trade Machine, but when I hit the tab on the top for "Pro Scan", when the new page comes up, I'm not able to do anything with it. It is basically the same as if everything were "greyed out".

I'm pretty sure it is *not* separate.  I'm signed up for the $89 subs (SO special offer).  The Pro Scan button works for me.

[cuegis]

9 minutes ago, skydragon said:

I'm pretty sure it is *not* separate.  I'm signed up for the $89 subs (SO special offer).  The Pro Scan button works for me.

That's interesting.. I better write to Ophir.

Thanks for responding.

[TrustyJules]

So CML is proposing a straddle purchase on PLCE ahead of earnings. Would that not be a better candidate for the SteadyOptions strategy of long/short straddle? Its definately a stock with low IV.

[Yowster]

4 minutes ago, TrustyJules said:

So CML is proposing a straddle purchase on PLCE ahead of earnings. Would that not be a better candidate for the SteadyOptions strategy of long/short straddle? Its definately a stock with low IV.

PLCE is NOT a low IV stock, its baseline non-earnings IV is around 33% making it a high IV stock (see chart below).   Also, earnings date is not confirmed yet and its options are very thinly traded so very wide bid/ask spreads and little open interest.

[BlackBat]

28 minutes ago, Yowster said:

its options are very thinly traded so very wide bid/ask spreads and little open interest.

I'm looking at the "Option Open Interest" and "Volume" columns in the option chains and the difference is obvious between PLCE and NVDA, for instance.

I would be interested in knowing some thresholds to make it easier for me to categorize a stock as "good liquidity", "average liquidity" and "poor liquidity".

Something like we have with "low IV stocks" meaning IV=12..18%, "mid IV stocks" meaning IV=18..25% and "high IV stocks" IV>25%

If this has already been discussed, I would be grateful to anyone who can point me to the relevant topic.

PLCE:

NVDA:

[rasar]

@BlackBat - You probably already know this, but liquidity is evident when looking at the Open Interest and Volume data. NVDA. it is also evident in the bid/ask spread. In general you could look for a tight spread - say 0.1% or less of the strike price. So for NVDA, 250 * 0.1% = $0.25, which is pretty much where the spread is in your table.

PLCE, on the other hand, has relatively sparse OI and sparser Volume. Further, tthe spreads are also way over the suggested percentage, between 0.6% and 0.9% of the strike.

This article may help.

[TrustyJules]

Yeah the spreads arent great except for the regular monthly expiry where there is some action. As regards the volatility - my bad - I looked at IV long-short which shows a different picture of course.

[cuegis]

Here is a chart , as of today, of PLCE IV vs HV.

The orange line is IV.

It looks like it is well into its rise, which started at 30 IV and is now 45 IV

[Sirion]

@Hielke

 

1 hour ago, Hielke said:

Hi @Sirion I just recently joint the VolatilityHQ service and would love to learn more about using the scanner. Would you be so kind to share your search settings, and if possible the reasoning behind it ? Thx in advance

Pre-earnings momentum trade. The basic thesis is that leading up to earnings, some stocks tend to have positive momentum regularly. It's a directional, high-risk, relatively short term trade. I'm laying this out because I think many people that were looking at these trades gave up during Q1 of this year, because oh man it was rough. 

Very small position sizing. Cap the number of trades you run at any given time. If you run this with other bullish strategies (short vol in particular), be even more careful and consider hedging your portfolio.

Some stocks that I trade with this will flat out ignore market drops during their pre-earnings phase. Others will not. 

While many trades are closed at -40% (a widely used rule of thumb is a profit target of +40%, loss limit 40%), I have had 100% loss trades. A stock I did this a couple of weeks ago with had an accounting scandal, dropped 15+% during the day, and rendered the options basically worthless. The only trades were small lots of minimum pricing, I assume traders closing positions for cleanliness/margin reasons. I actually let that one ride through earnings, thinking the commission fees weren't worth trying to close out the dirt, and the company had crushed earnings before - no luck.

 

Anyway, I personally think there's a definite edge here but you have to be careful both in terms of individual position sizing and overall portfolio effect.

I'm actually very behind with some of my logging, so I can't even give you my personal profitable trade rate, or the average gain using this strategy. I may even have lost money on it this year, considering how badly Q1 went. This quarter has treated me much better.

Some people have looked at an inverse of this trade - negative pre-earnings momentum, in an effort to balance some of the portfolio effects. The return scanner even lists put returns. (also, you can find some non-official straddle opportunities that don't meet SO criteria but may outperform their cost for whatever reason (RV drop might be too high, IV might be out of range, etc.) I don't think there are enough put candidates to justify the effort searching for them, so I haven't really pursued that myself.

If someone has been successfully utilizing those trades (as a balance or on their own), I'd be happy to discuss some elements of strategy with them. 

 

 

I think it's not an SO official trade largely due to the directional nature and volatility, though I might be putting words in Kim's mouth.

 

[cuegis]

8 minutes ago, Sirion said:

@Hielke

 

Pre-earnings momentum trade. The basic thesis is that leading up to earnings, some stocks tend to have positive momentum regularly. It's a directional, high-risk, relatively short term trade. I'm laying this out because I think many people that were looking at these trades gave up during Q1 of this year, because oh man it was rough. 

Very small position sizing. Cap the number of trades you run at any given time. If you run this with other bullish strategies (short vol in particular), be even more careful and consider hedging your portfolio.

Some stocks that I trade with this will flat out ignore market drops during their pre-earnings phase. Others will not. 

While many trades are closed at -40% (a widely used rule of thumb is a profit target of +40%, loss limit 40%), I have had 100% loss trades. A stock I did this a couple of weeks ago with had an accounting scandal, dropped 15+% during the day, and rendered the options basically worthless. The only trades were small lots of minimum pricing, I assume traders closing positions for cleanliness/margin reasons. I actually let that one ride through earnings, thinking the commission fees weren't worth trying to close out the dirt, and the company had crushed earnings before - no luck.

 

Anyway, I personally think there's a definite edge here but you have to be careful both in terms of individual position sizing and overall portfolio effect.

I'm actually very behind with some of my logging, so I can't even give you my personal profitable trade rate, or the average gain using this strategy. I may even have lost money on it this year, considering how badly Q1 went. This quarter has treated me much better.

Some people have looked at an inverse of this trade - negative pre-earnings momentum, in an effort to balance some of the portfolio effects. The return scanner even lists put returns. (also, you can find some non-official straddle opportunities that don't meet SO criteria but may outperform their cost for whatever reason (RV drop might be too high, IV might be out of range, etc.) I don't think there are enough put candidates to justify the effort searching for them, so I haven't really pursued that myself.

If someone has been successfully utilizing those trades (as a balance or on their own), I'd be happy to discuss some elements of strategy with them. 

 

 

I think it's not an SO official trade largely due to the directional nature and volatility, though I might be putting words in Kim's mouth.

 

One way of combining an SO trade with a CML momentum trade, would be, if you were going to already do a pre earnings calendar for example, and the CML pre earnings upward momentum trade fit into this timeframe, you could put on calendars a few strikes above ATM.

This way you would be able to buy those calendars for much cheaper than ATM, and if the thesis pans out, those calendars will eventually become ATM and have much more than the normal increase.

[Spread]

8 minutes ago, cuegis said:

One way of combining an SO trade with a CML momentum trade, would be, if you were going to already do a pre earnings calendar for example, and the CML pre earnings upward momentum trade fit into this timeframe, you could put on calendars a few strikes above ATM.

This way you would be able to buy those calendars for much cheaper than ATM, and if the thesis pans out, those calendars will eventually become ATM and have much more than the normal increase.

Great idea ! But I would think the VolatilityHQ return scanner provides enough info for this purpose. A long delta ... scan would provide the needed info. Or am I missing something? Does CML trade machine show anything more ?

Edited August 20, 2018 by Hielke

[Sirion]

2 minutes ago, Hielke said:

Great idea ! But I would think the VolatilityHQ return scanner provides enough info for this purpose. A long delta ... scan would provide the needed info. Or am I missing something? Does CML trade machine show anything more ?

Honestly, I'm about ready to cancel my CML trade machine. Just not getting good use out of the individual tools, and they don't post enough private research to make it worth it.

[NikTam]

15 minutes ago, Sirion said:

Honestly, I'm about ready to cancel my CML trade machine. Just not getting good use out of the individual tools, and they don't post enough private research to make it worth it.

I canceled a few months ago.  Big gains and big losses are possible.  I couldn’t monitor the trades closely enough.  I had a very large gain in 2017 that I mostly gave back in first couple months of 2018.  

[cuegis]

16 minutes ago, Hielke said:

Great idea ! But I would think the VolatilityHQ return scanner provides enough info for this purpose. A long delta ... scan would provide the needed info. Or am I missing something? Does CML trade machine show anything more ?

They are 2 different things which do a different type of analysis.

The Vol hq is basically a mathematical tool to measure the relative pricing of calendars and straddles etc., and compare current pricing to a history of past cycles ( 8 cycles going back 2 years)...so it is not looking at anything having to do with stock price movement, and that history.

The CML Trade Machine is looking at the stock price, in different situations, and how it has behaved.

One of the things, out of many, that it looks at, is if there was a repeating pattern of any particular stock, to rise in price during some period leading up until earnings.

Both of things should be analyzed separately, and valued on their own individual merits.

I was pointing out a unique time where both of these might coincide and you could put together some version of the "best of both worlds", by combining the two.

 

[TrustyJules]

23 hours ago, NikTam said:

I canceled a few months ago.  Big gains and big losses are possible.  I couldn’t monitor the trades closely enough.  I had a very large gain in 2017 that I mostly gave back in first couple months of 2018.  

For me the jury is still out on CMLTradeMachine but more because I cant find something to research myself with it. I have followed their earnings momentum trades and participated on and off my record is below. I avoided most of the straddle trades because from the beginning these never made sense to me and paper trading them showed a loss despite their analysis. They have recently started coming up with other technical indicators and what not - I have not followed these as often-times I am not sure I get what the rationale behind the analysis is. This is probably more due to me than them but I avoid trading something I do not understand. During the process I also saw that as quite a chunk of money is on the table using the +40/-40% cutoff is smart. You may miss a few big winners but other winners turn to losers on the last day. The trades below are all real trades:

• Infosys
  • Jan 8 OB 10 CJAN18 INFY 16 for 0.80$
  • Jan 10 CS 10 CJAN18 INFY 16 for 1.10$ Result: +0.30$/37.5%
• ASML
  • Jan 12 OB 8 CJAN18 ASML 150 for 2.60 EURO
  • Jan15 CS 8 C JAN18 ASML 150 for 4.00 EURO Result: +1.40 EURO/53.8% (I cant trace whether this was an earnings trade made at their advice or based on my own research but it was their earnings approach for sure)
• NFLX
  • JAN 18 OB 8 C FEB18 NFLX 220 for 10.07$
  • JAN 22 CS 8 C FEB 18 NFLX 220 for 14.17$ Result: 4.10$ or 40.7%
• LRCX
  • JAN 18 OB 8 C FEB18 LRCX 210 for 5.75$
  • JAN 24 CS 8 C FEB18 LRCX 210 for 8.30$ Result 2.55$ or 44.3%
• AAPL
  • JAN 23 OB 8 C FEB18 180 AAPL for 3.20$
  • JAN 29 CS 8 C FEB18 180 AAPL for 4.25$ Result 1.05$ or 32.8%
• MSFT
  • JAN 24 OB 20 C FEB18 92.50 MSFT for 1.99$
  • JAN 31 CS 20 C FEB18 92.50 MSFT for 3.72$ Result 1.71$ or 85.9%
• REGN - STRADDLE
  • JAN 25 OB 4 FEB 18 392.50 REGN STRADDLE for 28.39$
  • JAN 29 CS 4 FEB 18 392.50 REGN STRADDLE for 28.40$ Result: 0
• BA
  • JAN 29 OB 10 C FEB18 BA 350 for 7.85$
  • JAN 30 CS 10 C FEB18 BA 350 for 5.45$ Result -2.40$ or -30.5%
• GOOGL - here I accidentally held through earnings
  • JAN 30 OB 2 C FEB18 GOOGL 1180.20 for 37.30$
  • FEB 2 CS 2 C FEB18 GOOGL 1180.20 for 4.64$ Result -32.66$ or -87%
• AKAM - the position was losing money before earnings, I held through them thinking: how bad can it be?
  • JAN 30 OB 8 C FEB18 AKAM 66.50 for 3.60$
  • FEB 8 CS 8 C FEB18 AKAM 66.50 for 0.20$ Result -3.40$ or -94.4%
• TEVA - STRADDLE
  • FEB 1 OB 4 FEB 18 21 TEVA STRADDLE for 2.47$
  • FEB 7 CS 4 FEB 18 21 TEVA STRADDLE for 2.34$ Result - 0.13$ or -5.2%
• NVDA
  • FEB 2 OB 8 FEB18 240 NVDA for 9.60$
  • FEB 12 CS 8 FEB18 240 NVDA for 5.33$ Result: 4.27$ or -44.4%
• ATVI
  • FEB 5 OB  8 FEB18 70 ATVI for 3.10$
  • FEB 8 CS 8 FEB18 70 ATVI for 1.50$ Result: -1.60$ or -51.6%
• SQ
  • FEB 14 OB 8 MAR18 43 SQ for 2.64$
  • FEB 23 CS 8 MAR18 43 SQ for 3.57$ Result: 0.97$ or 35.2%
• INTU
  • FEB 20 OB 10 MAR18 180 INTU for 2.72$
  • FEB 23 CS 10 MAR18 180 INTU for 3.30$ Result 0.58$ or 21.3%
• PANW
  • FEB 21 OB 8 C MAR18 170 PANW for 6.10$
  • FEB 26 CS 8 C MAR18 170 PANW for 7.40$ Result: 1.30$ or 21%
• ALRM
  • FEB 22 OB 10 C MAR18 40 ALRM for 1.73$
  • FEB 27 CS 10 C MAR18 40 ALRM for 1.30$ Result: -0.43 or -24.8%
• COST
  • FEB 28 OB 10 C MAR18 195 COST for 3.10$
  • MAR 3 CS 10 C MAR18 195 COST for 1.03$ Result: -2.07$ or -66.9%
• MU
  • MAR 8 OB 10 C APR18 55 MU for 3.87$
  • MAR 21 CS 10 C APR18 55 MU for 6.40$Result: 2.53 or 65.3%
• LRCX
  • APR 11 OB 8 C APR18 LRCX 200 for 8.25$
  • APR 17 CS 8 C APR18 LRCX 200 for 11.00$ Result 2.75$ or 33.3%
• NFLX
  • APR 12 OB 5 C MAY18 NFLX 322.50 for 10.55$
  • APR 17 CS 5 C MAY18 NFLX 322.50 for 7.64 Result -2.91$ or -27.5%
• INTC
  • APR 12 OB 10 C MAY18 INTC 52.50 for 2.37$
  • APR 26 CS 10 C MAY 18 INTC 52.50 for 1.77$ Result -0.60$ or 25.3%
• SPOT
  • APR 13 OB 5 C MAY18 SPOT 150 for 10.08$
  • MAY 2 CS 5 C MAY18 SPOT 150 for 21.50$ Result: 11.42$ or 113.2%
• MSFT
  • APR 20 OB 20 C MAY18 MSFT 95 for 2.45$
  • APR 26 CS 20 C MAY18 MSFT 95 for 1.81$ Result: -0.64$ or -26.1%
• EA
  • MAY 3 OB 8 C MAY18 EA 118 for 4.55$
  • MAY 7 CS 8 C MAY18 EA 118 for 8.10$ Result: 3.55$ or 78%
• BZUN
  • MAY 9 OB 10 C MAY18 BZUN for 2.30$
  • MAY 16 CS 10 C MAY18 BZUN for 1.24$ Result: -1.06$ or -46%
• AMAT
  • MAY 10 OB 20 C MAY18 AMAT 55 for 1.40$
  • MAY 17 OB 20 C MAY18 AMAT 55 for 0.75$ Result: -0.65$ or -46.2%
• URBN STRADDLE
  • MAY 17 OB 10 MAY18 URBN 44 STRADDLE FOR 2.46$
  • MAY 22 CS 10 MAY18 URBN 44 STRADDLE FOR 2.05$ Result: -0.41$ or -16%
• MOMO
  • MAY 23 OB 15 C JUN18 MOMO 40 for 2.20$
  • MAY 27 CS 15 C JUN18 MOMO 40 for 4.55$ Result: 2.35$ or 100.6%
• MRVL
  • MAY 24 OB 50 C JUN18 MRVL 22 for 0.85$
  • MAY 31 CS 50 C JUN18 MRVL 22 for 0.27$ Result: -0.58 or - 68.2%
• PANW
  • MAY 25 OB 8 C JUN18 PANW 210 for 7.85$
  • MAY 30 CS 8 C JUN18 PANW 210 for 9.00$ Result: 1.15$ or 14.6%
• GWRE
  • MAY 31 OB 40 C JUN18 GWRE 95 for 2.50$
  • JUN 5 CS 40 C JUN18 GWRE 95 for 2.35$ Result: -0.15$ or -6%
• RH
  • JUN 5 OB 8 C JUN18 RH 107 for 7.00$
  • JUN 7 CS 8 C JUN18 RH 107 for 10.00$ Result: 3$ or 42.8%
• MU - I was delayed in a plane and missed the possibility to close ahead of earnings
  • JUN 13 OB 10 C JUL18 MU 60 for 4.40$
  • JUN 25 CS 10 C JUL18 MU 60 for 0.64$Result: -3.76$ or -85.4%
• NFLX
  • JUL 2 OB 3 C JUL18 NFLX 400 for 18.99$
  • JUL 9 CS 3 C JUL18 NFLX 400 for 27.38$ Result: 8.39$ or 44.1%
• GOOGL
  • JUL 2 OB 2 C JUL18 GOOGL 1150 for 27.50$
  • JUL 12 CS C JUL18 GOOGL 1150 for 57.50$ Result: 30$ or 109%
• JNJ
  • JUL9 OB 20 C JUL18 JNJ 128 for 0.94$
  • JUL12 CS 20 C JUL18 JNJ 128 for 1.37$ Result: 0.43 or 45.7%
• INFOSYS
  • JUL9 OB 20 C JUL18 INFOSYS 20 for 0.55$
  • JUL13 CS 20 C JUL18 INFOSYS 20 for 0.37$ Result:- 0.18$ or -32.7%
• MSFT
  • JUL 12 OB 20 C JUL18 MSFT 105 for 1.24$
  • JUL 13 CS 20 C JUL18 MSFT 105 for 1.93$ Result: 0.69$ or 55.6%

Net for these trades before Commissions was 18,709$

Ok Am tired of going through all the trades there is half a dozen more : a disaster with NFLX due to a dinner running late and a few duds along the way; most recently NVDA was but BABA a star- you get the idea. Active management of the positions is required - several of the best results are the consequence of profit taking plain and simple when I found the numbers to be dizzyingly attractive. The results aren't bad however I remain sort of wondering whether this isn't simply a normal tendency of stocks to rise somewhat close to earnings and gain in volatility which makes the options dearer. I have ignored their new ideas for the moment and still need to figure out how to institutionalise use the positive results above and avoid some of the losers. Admittedly the biggest ones were mainly my own fault!

 

[rasar]

Thanks for this, @TrustyJules. (I think I was right there with you on some of those trades , like AKAM). There is one additional resource that I found interesting, if you haven't used it already.  VolatilityHQ provides a detailed and back-tested return matrix. It works well with these momentum trades.

I had recently joined this forum, and tagged along for a few of these rides. Just when I was about to dive in deeper, the trades pretty much dried up.

[cuegis]

20 minutes ago, TrustyJules said:

and gain in volatility which makes the options dearer.

I think this might be a big part of any gains that happened from outright long calls.

During non earnings times, as stock prices rise, IV goes down all around, and especially on the OTM, upside strikes.

But, because of the rise in IV in the week leading up until earnings, calls will have the additional support of the rising IV.

The same price gain during a non earnings period probably wouldn't be reflected as much in outright long calls as these trades would be.

Call verticals would always do better as the theta and vega exposure of the position is offset to a great degree.

[TrustyJules]

1 minute ago, cuegis said:

Call verticals would always do better as the theta and vega exposure of the position is offset to a great degree.

I am not sure this is necessarily the case, I thought theory says  ATM options gain less from the rise in IV than the OTM options - this would necessitate a DEEP ITM vertical otherwise you could wind up short when IV inflates the OTM options faster.

[TrustyJules]

Actually I will test this with a ratio trade on CRM and see what happens. Long 145 and short 140 on 2.5 ratio

[Yowster]

also factoring into this is that gamma gains are slower the higher the IV... so although during earnings times the IV rising helps offset theta, but that same IV rise also causes gamma to grow slower.

[Spread]

On 8/20/2018 at 8:00 PM, cuegis said:

They are 2 different things which do a different type of analysis.

The Vol hq is basically a mathematical tool to measure the relative pricing of calendars and straddles etc., and compare current pricing to a history of past cycles ( 8 cycles going back 2 years)...so it is not looking at anything having to do with stock price movement, and that history.

The CML Trade Machine is looking at the stock price, in different situations, and how it has behaved.

One of the things, out of many, that it looks at, is if there was a repeating pattern of any particular stock, to rise in price during some period leading up until earnings.

Both of things should be analyzed separately, and valued on their own individual merits.

I was pointing out a unique time where both of these might coincide and you could put together some version of the "best of both worlds", by combining the two.

 

I get your point but I think the Vol HQ return matrix with long delta 90 call will provide the required info also in some degree,

[Spread]

On 8/20/2018 at 7:27 PM, cuegis said:

One way of combining an SO trade with a CML momentum trade, would be, if you were going to already do a pre earnings calendar for example, and the CML pre earnings upward momentum trade fit into this timeframe, you could put on calendars a few strikes above ATM.

This way you would be able to buy those calendars for much cheaper than ATM, and if the thesis pans out, those calendars will eventually become ATM and have much more than the normal increase.

Any thought about applying the same idea to the hedging of straddle's. You could place the short one strike up/down based on a directional bias

 

[cuegis]

3 hours ago, Hielke said:

I get your point but I think the Vol HQ return matrix with long delta 90 call will provide the required info also in some degree,

I know. You're probably right about this.

The creator of Vol hq has pointed me to use this feature and I haven't gotten around to it.

I guess it's because there are so many columns  it's hard to remember what each one is by the few letters on top.

[cuegis]

3 hours ago, Hielke said:

Any thought about applying the same idea to the hedging of straddle's. You could place the short one strike up/down based on a directional bias

 

Yes..that would give you a "head start" if you felt the stock was going to move away in a certain direction.

But, unlike a calendar, where you want the stock price to move TO the strike of your calendar, with a straddle you want the price to move as far away from it as possible.

So it is the opposite.

But, if the stock was $65, for example,and you felt that it was going up, you could buy the $64, or $63 straddle, to sort of give you a head start on that move away from the strike.

[Spread]

21 hours ago, cuegis said:

Yes..that would give you a "head start" if you felt the stock was going to move away in a certain direction.

But, unlike a calendar, where you want the stock price to move TO the strike of your calendar, with a straddle you want the price to move as far away from it as possible.

So it is the opposite.

But, if the stock was $65, for example,and you felt that it was going up, you could buy the $64, or $63 straddle, to sort of give you a head start on that move away from the strike.

I was thinking about move the sort strangle a bit, so if the long straddle is $65, instead of opening a 63.5 / 66.5 short strangle, choose a 64/67 strangle

[TrustyJules]

 

So CML has been coming up with all kinds of weird trades of late - one of them was their MAMMOTH BULL Pattern on BZUN in which they claimed that it was ready for a bullish breakout outside of earnings. I took a punt to follow this trade but not as CML Recommended with a long call. I am till holding the trade behind this alert butI wasn't sure I bought this 'CML Mammoth Bull' pattern nor indeed whether it means anything. After all humans see patterns in everything including pure chaos so the question was to make a bet on the trade without risking one's shirt. This I did as follows:

 

STO 5 C SEP21 50

BTO 10 C SEP21 55

STO 5 C SEP21 65

net credit 0.55$

 

Of course there is a 2,3K margin locked on this trade. I sold the 65 strike because I was sceptical of the pattern and wanted to create some extra padding in case the stock would stall around the 55 mark which would otherwise be the worst outcome.

 

Earlier today I closed the 65 strike and sold the 60 strike for 0.32 $ credit as the trade seemed to be going south. Right now I am down 225$ against the long call being down 1000$ (assuming one bought 5 units) which would have stop lossed today. As it stands I can still afford to wait for expiration - if the stock were to go down more, all options expire worthless and the trade makes money on a stock of 50.50$ and lower.

 

I would hit the same level of loss as the straight out call today only around the 17th of September. Its still ok to wait and see if CML comes through - the 17th is still a ways off and BZUN can certainly move - in August its been at 58 and 48 (either one would suit this trade!)

 

Generally the ratio trade seems to be a better bet for such bullish (or bearish) bets as CML sometimes promotes. The short ITM strike buffers the losses of the long position. If it is an earnings play you have the added advantage that increasing volatility will benefit the OTM option more than the ITM one thereby creating an additional layer of comfort. Its true that the profit slope is less acute than with a straight out call but the risk is really much much much lower.

 

Lesson for anyone following a tip: don't follow a tip blindly - I have actually done rather well from CML alerts but I haven't followed half of them nor executed them exactly as they recommend. Like I said I am not sure I believe these 'Mammoth Bull Pattern' things but at least I still have my shirt.

 

Still holding the trade behind this alert but I did it differently than the straight out call as I wasn't sure I bought this 'CML Mammoth Bull' pattern nor indeed whether it means anything. After all humans see patterns in everything including pure chaos so the question was to make a bet on the trade without risking one's shirt. This I did as follows:

 

• STO 5 C SEP21 50
• BTO 10 C SEP21 55
• STO 5 C SEP21 65
• net credit 0.55$

 

Of course there is a 2,3K margin locked on this trade. I sold the 65 strike because I was sceptical of the pattern and wanted to create some extra padding in case the stock would stall around the 55 mark which would otherwise be the worst outcome.

 

Earlier today I closed the 65 strike and sold the 60 strike for 0.32 $ credit as the trade seemed to be going south. Right now I am down 225$ against 'Destriero' being down 1000$ (assuming he bought 5 units). As it stands I can still afford to wait for expiration - if the stock were to go down more, all options expire worthless and the trade makes money on a stock of 50.50$ and lower.

 

I would hit the same level of loss as the straight out call today only around the 17th of September. Its still ok to wait and see if CML comes through - the 17th is still a ways off and BZUN can certainly move - in August its been at 58 and 48 (either one would suit this trade!)

 

Generally the ratio trade seems to be a better bet for such bullish (or bearish) bets as CML sometimes promotes. The short ITM strike buffers the losses of the long position. If it is an earnings play you have the added advantage that increasing volatility will benefit the OTM option more than the ITM one thereby creating an additional layer of comfort. Its true that the profit slope is less acute than with a straight out call but the risk is really much much much lower.

 

Lesson for anyone following a tip: don't follow a tip blindly - I have actually done rather well from CML alerts but I haven't followed half of them nor executed them exactly as they recommend. Like I said I am not sure I buy these 'Mammoth Bull Pattern' things but at least I still have my shirt.

[krisbee]

https://tm3.cmlviz.com/index.php?share_key=s_0_20180906233611_00by89soseSEHzSq

AZO

Earnings:

[FrankTheTank]

5 minutes ago, krisbee said:

https://tm3.cmlviz.com/index.php?share_key=s_0_20180906233611_00by89soseSEHzSq

AZO

Earnings:

 

Im tempted to jump in with a small position.  My ADBE pre-earnings momentum trade has been doing really well.  

(edit - naked call options too rich for my risk tolerance, maybe a vertical?)

Edited September 10, 2018 by FrankTheTank

[greenspan76]

This topic was a little more active a while back and I had intended to give an update on my results at the 1 year mark, but I've been busy with other projects the last few months. My first CML trade was June 19, 2017, so it has now been almost 15 months and so far I still am only making trades posted on the blogs and by others. Anyway, here's my results to date using CML without actually having a subscription. I think it would be worth the subscription and will likely subscribe soon.

 

Post-earnings Short Put Spread: 50 trades / +13.7% avg

Post-earnings iron condors (mix of short and long): 25 trades / -19.4% avg

Straddles (mix of pre- and post-earnings): 58 trades / +8.8%  avg

Pre-earnings Call: 202 trades / +3.0% avg

TTM Squeeze: 10 trades / +48.5% avg

Other: 10 trades / -36.6% avg

---------------------------------------------------

Total Trades: 355 trades / +4.0% per trade avg

(The results are not normalized, but I traded the closest I could to the same dollar amount per trade. Even so, some trades were 20% higher or lower than my trade amount, so that has some small effect. I haven't analyzed it to see if the effect helps or hurts the overall numbers versus being normalized)

Edited September 10, 2018 by greenspan76

[FrankTheTank]

Thanks so much for sharing.  This is very valuable.   What is "TTM" squeeze?  I don't see that as one of their posted strategies but I could be missing something.  

[Alan]

@greenspan76.When you say Short Put Spread is this the same as a put credit spread (a bullish trade), or is the "Short" referring to a bearish trade (i.e. a put debit spread)?

Also, is the latter trade something that has been discussed somewhere here on SO?

[greenspan76]

7 hours ago, Alan said:

@greenspan76.When you say Short Put Spread is this the same as a put credit spread (a bullish trade), or is the "Short" referring to a bearish trade (i.e. a put debit spread)?

Also, is the latter trade something that has been discussed somewhere here on SO?

Yes, a put credit spread. Usually, these are opened a day or two after earnings and held for anywhere between 7 and 30 days. I don't recall any of these types of trades being done on SO, except for people posting about the CML trades.

[greenspan76]

16 hours ago, FrankTheTank said:

Thanks so much for sharing.  This is very valuable.   What is "TTM" squeeze?  I don't see that as one of their posted strategies but I could be missing something.  

TTM Squeeze is an indicator / charting tool developed by John Carter that tries to identify periods of consolidation leading to big moves. The consolidation is called a squeeze and you trade the breakout, so this is more of a technical analysis play and is different than CML's standard pre- or post-earnings plays. TTM Squeeze is available on some charting tools. CML posted a few blog entries at the end of 2017 showing backtests of particular trading rules. For example, one of the backtest showed that over the previous five years if NVDA had a bullish breakout of the squeeze greater than 1%, buying a ~15DTE 40 delta call with stop limit of 50% and limit gain of 50% produced 8 wins and 3 losses for an average gain of 45.3%. These are more complex trade because there are several rules, like if the stock drops 2% or more 2 days in a row, you close the trade. Anyway, I tried a few of them and they worked great, but they are pretty high risk / high reward trades and I don't really actively look for them anymore.

[cuegis]

They really nailed a huge winner with NVTA.

It was based on an unusually large accumulation of insider buying, and their trade was triggered before this breakout...

[skydragon]

57 minutes ago, cuegis said:

They really nailed a huge winner with NVTA.

Is that ticker a typo?

[cuegis]

10 minutes ago, skydragon said:

Is that ticker a typo?

No, that is the symbol.

This where I saw it...

http://www.cmlviz.com/index.php?ticker=nvta&tab=insider-trading

[David_H]

To those who are currently subscribed to CML, can you share what its performance looks like so far overall? I know everyone can build his own custom trades but does it track the performance of its own picks?

And I noticed there was $49 promotion when it came out. Can someone share that promotion link? Is that still valid?

Thanks.

[FrankTheTank]

On 10/20/2018 at 7:06 PM, Seth H said:

To those who are currently subscribed to CML, can you share what its performance looks like so far overall? I know everyone can build his own custom trades but does it track the performance of its own picks?

And I noticed there was $49 promotion when it came out. Can someone share that promotion link? Is that still valid?

Thanks.

CML first and foremost is a data provider and backtesting engine.  They are not really a trade or signal provider so I don't really think its fair to judge them on this metric.  However, user greenspan on this board had a good post I quoted below from last month with his results.

 

Im my personal experience with CML, most of the trades I took based on their ideas were long biased, pre-earnings trades which all got crushed over the past 2 weeks which is right when I started putting real money into these ideas (just bad luck on my part).  I think the big flaw is that most of these backtests were all done during the past bull market so of course most long oriented trading ideas will look great.  This is not the fault of CML, just a caution that many of the trading strategies they post look great based on bull market data.

 

The best rate of I have seen for them now is $89 per month.

 

On 9/10/2018 at 3:52 PM, greenspan76 said:

This topic was a little more active a while back and I had intended to give an update on my results at the 1 year mark, but I've been busy with other projects the last few months. My first CML trade was June 19, 2017, so it has now been almost 15 months and so far I still am only making trades posted on the blogs and by others. Anyway, here's my results to date using CML without actually having a subscription. I think it would be worth the subscription and will likely subscribe soon.

 

Post-earnings Short Put Spread: 50 trades / +13.7% avg

Post-earnings iron condors (mix of short and long): 25 trades / -19.4% avg

Straddles (mix of pre- and post-earnings): 58 trades / +8.8%  avg

Pre-earnings Call: 202 trades / +3.0% avg

TTM Squeeze: 10 trades / +48.5% avg

Other: 10 trades / -36.6% avg

---------------------------------------------------

Total Trades: 355 trades / +4.0% per trade avg

(The results are not normalized, but I traded the closest I could to the same dollar amount per trade. Even so, some trades were 20% higher or lower than my trade amount, so that has some small effect. I haven't analyzed it to see if the effect helps or hurts the overall numbers versus being normalized)

 

[Kim]

The current price is $89, but it will go to $149 soon. Here is the link:

https://cmlviz.com/register/steadyoptions-cml-trademachine-pro/

For me, it has been the best backtesting tool. I would highly recommend it.

[Manish71]

Hi Kim,

The SO trades given out in the last couple of days do not give good results when back tested with CMLViz. So my question is when trade ideas are given out in SO, do I need to back test using any tool ?

And why did CMLViz not give good back test results for the last four SO trades ?

Thanks.

[Kim]

It all depends how you manage the trades. CMLViz is an excellent tool, but it has its limitations. The main one is that it relies on EOD prices only. 

[Yowster]

@Manish71 to add to Kim's comments - another thing is that there is no filter setup on CMLViz that says to open trades based on volatility levels.   As you know, market volatilty influences the types of trades we open in different climates.   Also, and this has been mentioned in prior CMLViz discussions, the last 3 years have basically been increasing markets with low volatility, any VIX spikes were moderate and short-lived.   Therefore, the market climate of the last month or so is one that won't appear in any CMLviz backtest data

[Manish71]

Another trade idea from CML. The problem I have found with these trades is that they are theta negative and the short duration of the trade (7 days in this case) makes it very difficult to get a profit unless the stock moves a lot.

 

Fedex announced results yesterday and the stock is down after market.

 

======================================================================================================================================

With the bull gone and a bear market in sight, let's look at successful option strategies that trigger off of an earnings miss. If FedEx doesn't move down off of the earnings result, no problem, we'll put a pin in this back-test and revisit it next quarter. 

This is a slightly advanced option trade that bets on volatility for a period that starts one-day after FedEx Corporation (NASDAQ:FDX) earnings and lasts for the 6 calendar days to follow, that has been a winner for the last 5 years and 1 year. We note the use of strict risk controls in this analysis. 
 

FedEx Corporation (NASDAQ:FDX) Earnings

In FedEx Corporation, if the move off of earnings was down, even the slightest amount, if we waited one-day after earnings and then back-tested going long an one-week straddle (using two-week options), the results were quite strong. This trade opens one-day after earnings were announced to try to find a stock that moves a lot after the earnings announcement. 

 

[Kim]

@Manish71being theta negative is not necessarily a problem. Some of those trades simply bet on a certain pattern that involves stock movement. When you get it right, the trade can still be profitable despite negative theta. Exactly like our straddles or RICs.

[Manish71]

CMLViz has added technical triggers in the backtesting tool. It will be interesting to see what kind of results the trades taken after using the technical triggers give now.