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  1. Yesterday
  2. Michael C. Thomsett

    Where to Find Exceptional Trading Data?

    This is a problem of great magnitude. The mere volume of data produced daily is staggering. According to The Visual Capitalist, every day sees 500 million tweets and 294 billion emails. About 5 billion online searches are made, and by 2025 an estimate is that 463 exabytes of data will be created around the world. That’s over 212 million DVDs … every day. What exactly is an exabyte? It’s equivalent of 1,0006 bytes and is written as the unimaginable number 1,000,000,000,000,000,000,000,000. Many of us can remember the old days when we thought that 64k (64 kilobytes, or 1,000 bytes) was big. But as the ability to create, manage and transmit data grows every day, the entire world of data is changing. For options traders, this has a serious ramification. If you make trades based on data you collect about a stock, historical and implied volatility, current news, stock charts, and analysts’ opinions, you’re in deep water. You could drown in the data. How do you know which data sources are accurate and which are not? It is not an easy task and there is no easy or authoritative answer to the question. It would be naïve to assume that because we rely on data, we are being smart. By timing entry or exit in an option position, based on data about probability, volatility and history, are we using reliable data? Do we reject past methods due to the troubling level of information and our inability to filter the goof from the bad? If we must reject the methods of the past, what do we replace it with? How do we filter data to ensure that what we do use is reliable, either on a fundamental or a technical basis? It seems apparent that there is only one way to avoid being drowned in data, including contradictory or inconclusive data. That is to identify a very, very short list of data we can use to time options trades. In the past, options traders might have fallen into the trap of thinking that more data equals better decisions and, of course, that less data equals poorer decisions. In truth, the opposite might be true, if your short list is accurate and reliable. Here is a short list for the starting point, the fundamentals about the underlying. This is a good starting point assuming you want to trade options on well-managed, profitable companies, and all tests should be performed over 10 years: Dividends per share (looking for dividends to rise every year, which defines the company as a “dividend achiever.” Dividend yield at 3.5% or higher. Debt-to-capitalization ratio that is steady or declining. (High dividends are misleading if accompanied with rising long-term debt, so this test is connected directly to tests 1 and 2). Annual P/E range between 10 and 25 with few exceptions. (Current P/E is not reliable because it compares current price to outdated earnings; annual ranges are more revealing.) Consistent and rising annual revenues and net profit; and steady net return. Options traders who limit their strategies to companies qualifying for this short list of fundamentals are likely to experience lower than average volatility and consistency of returns. However, going along with this is a short list of technical indicators to use for timing of entry or exit. Here is a list of the strongest technical signals to use in timing options trades: A combination of Bollinger Bands and the t-line. In dynamic moves, the combined use of two indicators sets up a narrow channel. When prices moves outside of the channel, it gives you an exceptionally strong reversal signal. To improve Bollinger Bands even more, change the default to three standard deviations. Price rarely moves above the upper band or below the lower band, and when it does, it will not last longer than one or two sessions. If you are patient in waiting for this signal based on three standard deviations, you will spot the strongest possible reversal forecast. Island reversals. These are defined as a small number of sessions either above or below the established trading range, identified with a gap before and after. This also sets up an easily observed reversal signal. Exceptionally strong candlestick reversals. These include morning and evening stars, abandoned baby, three white soldiers, three black crows, hammer and hanging man, to name a few. Recognizing strong candlestick reversals and finding confirmation in other signals, ensures a vastly improved level of timing for options trading. The volume spike. A lot of volume signals can be set up on free online charts, but the best one is quite visual and a powerful reversal signal. This is a change in the volume of trading far above the average, with volume returning immediately to more typical levels. You often find the volume spike as confirmation of breakout and other changes. For example, after a strong earnings surprise, price may gap above (positive) or below(negative), accompanied by a volume spike. A contrarian strategy is to assume prices will retrace to the previous range within a few sessions, identifying the opportunity to move against the crowd. Gaps above resistance or below support. This is perhaps the most basic signal. New trends happen when the current trading range is violated. But when price gaps outside of the range, reversal is more likely than at any other point. This marks the best time to exit an existing option trade or to enter a new one -- or both. Options traders face the same problem as everyone else: being able to tell the difference between the good and the bad in ever-growing levels of information. More is not always better. Past assumptions along these lines have demonstrated that it makes more sense to focus on a very short list of data sources that provide exceptional intelligence about the value of the underlying and about the likelihood of reversal in the current price. In modern options trading, more is not better; less is better. Michael C. Thomsett is a widely published author with over 80 business and investing books, including the best-selling Getting Started in Options, coming out in its 10th edition later this year. He also wrote the recently released The Mathematics of Options. Thomsett is a frequent speaker at trade shows and blogs on his website at Thomsett Guide as well as on Seeking Alpha, LinkedIn, Twitter and Facebook.
  3. Last week
  4. Yes that is correct. Correct, short the first weekly (if there is a weekly) and leg the first monthly. Both are after the earnings date. I think in this case, the problem comes from the bid-ask spread which is large, and i'm basing all my calculations on the mid price, which is ok for liquid stocks, but not realistic for illiquid stock. I only have the bid/ask prices of individual options, not spreads, so it's difficult to know how much that calendar could get filled. I'm double checking with ThinkOrSwim Thinkback. The call calendar on Feb 06 2018 is at 0.10 credit because of the bid/ask spread, and i think that's why the -250% comes from. Return is (CalendarPriceT+1/CalendarPriceT-0) -1 The next day, it's 0.15 debit. The double calendar is just a call calendar + put calendar. Return is (0.275/0.05-1)=450%. Obviously irrealistic because of the bid/ask spread and commissions. I think i should at least implement some sort of a tooltip so that when you put your mouse on the return, you get that information to decide why it's like that.
  5. @djtux, I've searched for documentation on the following feature but couldn't find it. So, maybe you can pls clarify : 1) Under the 'Straddle' top level drop-down, there is an option called 'Table' which shows a histogram and a table of various things including the below Can I ask if the 'Straddle return' is return for a straddle that is bought at T-0 and closed on the first full day of the earnings? Eg. for HAS, earnings are BMO Tue 23-Apr, so would the return be calculated as [(straddle price on Tue 23-Apr at market close) - (straddle price on Mon 22-Apr at market close)/(straddle price on Mon 22-Apr at market close) ? 2) For the "Call Calendar Return", would it be similar to above, with the short calls expiring the first Fri after earnings and the longs expiring on the next monthly date? For HAS, the shorts would be Fri 26-Apr and the longs 17-May? 3) I'm curious how the max loss on a Call Calendar Return can be greater than 100% (see above)? Also, I think the Dbl Calendar Return is incorrect. (Is the Dbl Calendar Return a combination of the Call and Put Calendar Returns?)
  6. I updated TradeLogIB to support modern TWS / TWS API versions and added a support for automatic UTC to Local Time Zone conversion: https://github.com/stenri/TradeLogIB Check "TradeLogIB 4.0 notes" section documentation for a details on updating the script and TWS.
  7. Aristotle33

    Leveraged Anchor: A Three Month Review

    I discovered that CBOE has a new index, BXMC, which conditionally writes calls when the VIX is above 20. It improved performance a bit over BXM. I only write covered calls occasionally but it does tend to reduce the volatility of returns while not necessarily improving CAGR
  8. AlexInAlaska

    Tradier Brokerage Special Offer

    Interesting. I got a follow up email about my ITM options being exercised by 3:30pm ET yesterday. That didn’t happen. Heh
  9. SBrooks154

    Iron Condor adjustments

    Yeah it wasn't tested as much in reality as I guess it was my expecations through prior moves! Yeah I just started following the guys from Tasty Trade I'll be sure to look at that example! Thanks for the input!
  10. TrustyJules

    Iron Condor adjustments

    I have seen this advertised by the guys from Tasty Trade for example - I think you reduce the space in which you can make profits and therefore the probability of a profitable trade. What you are buying is an insurance that your original thought of a range bound underlying is covered in case you were wrong, if you change your opinion about that range then the trade as a whole should be questioned. In those case I understand - but note I am far from expert - that its better to move the whole condor up or down as may be appropriate and to do so without delay. With a condor your worry is that one of your legs is going to get punched through so adjustments should reflect that. Not sure if you are signed up to creating alpha? However if you do look at @SBatch Elephant trade which is a remarkable trade where he picks a range for the underlying (TLT in his case) and through many many tweaks throughout the trade lifetime moves that range if the market requires it basically selling potential final profit in exchange for security that we remain in the profit range. As subtle as that strategy is and as well as it works even then we cannot always avoid a loss due to an unexpectedly large and fast movement in SD of the underlying. There is no such thing as a free lunch.
  11. TrustyJules

    Iron Condor adjustments

    If you were able to close the short on the side you were worried about for 0.04$ then it cant have been very heavily challenged. As a rule closing shorts when they are worth pennies is a good idea. As for lottery tickets - remember options are probabilistic and tend to follow the rule of averages that you can either make many small gains very frequently and then have the occasional whopping loss or to have near total wipeouts every time except for the occasional whopping win. In the long run unless you have some edge this is a zero sum game. What is certainly true is that nothing beats being long and right on direction with an option - the problem we all have: how do we know when to be long?
  12. Dennis

    Iron Condor adjustments

    What are your thoughts on financing that hedge on the challenged side by harvesting profits on the unchallenged side, maybe moving the short option down a strike or two?
  13. SBrooks154

    Iron Condor adjustments

    Also today I bought a 4 cent call just as a lottery ticket for tomorrow on a stock that I had an iron condor on! The order filled as a close on the call side which was the side I was worried about! I called in a panic that I had botched the iron condor and she told me that I was better off now because that challenged side was ok now and I had my lottery tickets in case the stock rallies tomorrow! If what she told me is true to me that's an excellent way to adjust an iron condor before it goes bad! Can you verify this for me so I know everything she told me was the truth! Sounds almost too good to be true! Thank you for any feedback!
  14. SBrooks154

    Iron Condor adjustments

    I'm sorry I meant sell a call or put on the opposite side! Thanks for the feedback I'll look into those stradegies!👍
  15. RapperT

    Welcome to Steady Futures

    will be monday as code runs automatically on friday
  16. ex3y7s

    Tradier Brokerage Special Offer

    I called Tradier and they confirmed that the email went out a day early because of the holiday.
  17. TrustyJules

    Tradier Brokerage Special Offer

    Actually I had the message from Tasty Works as well
  18. Wandering

    Tradier Brokerage Special Offer

    I got the same e-mail as well, and have asked for clarification.
  19. AlexInAlaska

    Tradier Brokerage Special Offer

    I got that email this morning too. Seems like an error.
  20. ex3y7s

    Welcome to Steady Futures

    For a short week like this week do the rolls take place tomorrow on Thursday or wait until Monday?
  21. akito

    Tradier Brokerage Special Offer

    Yup. I also received the same thing and I've sent them an email asking for clarification. Most likely an error on their part.
  22. rigulator

    Tradier Brokerage Special Offer

    I was wondering too about that email. Probably a mistake. We'll see, whether they send another mail few hours before market close as they usually do.
  23. ex3y7s

    Tradier Brokerage Special Offer

    Did anyone else get an email from Tradier notifying them they have options positions expiring today? I have many April 18th positions, but no Wednesday options. I know Friday is a market holiday, but the April 18th equity options trade until the close tomorrow, Thursday, April 18th, correct?
  24. TrustyJules

    Iron Condor adjustments

    I am not sure I understand why you'd want to sell an additional call or put on the side being challenged. Thats like doubling down with the risk of making things worse. The most typical corrective measure I heard of is to buy a call or put in a future expiry a few strikes out from the challenged side. The time to do this is when the underlying is reaching the short strike. The number of hedges you buy depends on your condor but a factor of 1:10 is advised for index options. So if you have a 10 unit Iron Condor you would buy one hedge when challenged. If the underlying rips through the short you will be covered for some of the loss by the growth in the long position. if it falls back you liquidate the long and chalk the cost up to insurance for having a safe trade.
  25. SBrooks154

    Iron Condor adjustments

    What is the best way to adjust an iron condor! I'm hearing sell a call or put on the losing side but sometimes there's not enough premium left! I thought about doing a debit spread next to the side being comprimised! Then you are not promised it will blow through your limits! I've heard to buy out of the money positions not sure how that helps unless the price moves that far against you! What happens if you close out as soon as the price gets in the money! Do you only lose your profit instead of about 3 times your profit as is with most iron condors? I'm new to options so sorry if this makes no sense! Thanks!
  26. SBrooks154

    Benefits of Volatility on an option

    It almost has me wanting to pay more premium to take advantage of volatility! Your max profit is also not capped you just need to find the real winners! What is the best way to adjust an iron condor! I'm hearing sell a call or put on the losing side but sometimes there's not enough premium left! I thought about doing a debit spread next to the side being comprimised! Then you are not promised it will blow through your limits! I've heard to buy out of the money positions not sure how that helps unless the price moves that far against you! What happens if you close out as soon as the price gets in the money! Do you only lose your profit instead of about 3 times your profit as is with most iron condors?
  27. Yowster

    Benefits of Volatility on an option

    If your spread is using the same (or close to the same) expiration for equal number of short and long legs whose strikes are relatively close to each other - then yes, the short and long legs IV will to a large degree offset each other out and therefore minimize the effect of volatility changes. BTW, IMO this is why TV shows such as Options Action typically use these spreads when placing their directional trades, so they don't have to get into all the complexities about IV changes (since the trades are mostly directional with the largest greek impact coming from theta).
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