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Before ever entering a trade, we need a plan. For example, we want to know whether we should avoid earnings, or trade with earnings. Knowing where to place a stop loss, and even a limit gain. Knowing which strike to trade. Knowing whether to trade the monthly or weekly options. But it even goes further – even if we know which direction we think the stock will go – do we sell puts or sell a put spread? Do we buy calls or a call spread? Should we be net owners or sellers of volatility? Has there been measurable edge in the trade in the past, or not? This is how people profit from the option market — it’s preparation, not luck. All of these questions were designed to be answered with the CMLviz Trade Machine, which is an option back-tester created by Capital Market Laboratories (CML). I have been in the same circle as this company’s founder for years. CML is in fact a member of the famed Thomson First Call roster. Their research sits side-by-side with Goldman Sachs, Morgan Stanley, Barclays and the rest of the bulge bracket banks, but they have a different goal: To break the information asymmetry that exists between the top 0.1% and the rest. To learn more about the product, you can tap on the link below. You will see a 4- minute video demonstration. I think, for many of you, it will become a valuable tool to supplement your trading and the analysis that Steady Options provides. Tap Here to Watch the Video and Sign Up P.S. Our members know that I rarely promote other products. But this one really got me excited. I encourage you to give it a try. They plan tons of additional functionality in the upcoming months, including custom strategies to trade around earnings which can be a great benefit for us. CMLviz Trade Machine is constantly adding new features, and the price will be increasing as new features are added. Those who sign up are grandfathered at the price they signed up even as the prices increase.
Ophir Gottlieb posted a topic in General BoardHow to Profit from Trading Options in Autodesk Inc Right After Earnings Date Published: 2017-05-18 Written by Ophir Gottlieb LEDE While Autodesk Inc (NASDAQ:ADSK) just crushed earnings again, sending shares soaring in the after hours trade, one option trade after earnings has been a consistent winner. It takes no earnings risk, little stock direction risk and over the last year has never lost while returning over 160% annualized returns. The Trade After the Excitement While most of the focus is on the actual earnings move for a stock, that's the distraction when it comes to the option market. For Autodesk Inc, irrespective of whether the earnings move was up or down, if we waited one-day after the stock move from earnings, and then sold an out of the money put spread, the results were very strong. We can examine this, objectively, with a custom option back-test. Here is our earnings set-up: Rules * Open short put spread 1 day after earnings * Close short put spread 29 days later * Use the option that is closest to but greater than 30-days away from expiration Here are the results over the last year: That's a 47.3% return, with 4 winning trades and 0 losing trades. The total holding period was less than 4 full months, meaning the annualized return was over 160%. No earnings risk was taken -- this is not a coin flip over earnings. The Logic This strategy works beautifully in many companies where heavy stock volume follows the earnings release. The logic behind this trade follows a narrative that even after a bad earnings release, if we wait a day after, we find the stock at a point of equilibrium. If it gapped down -- that gap is over. If it beat earnings, the downside move is already likely muted. Here's how this strategy has done over the last 6-months: That's a 21.3% return, on 2 winning trades and 0 losing trades. Since this is a total of a two-month holding period, that 21.3% is actually over 120% annualized. If you're curious, yes, this also produced positive returns over the last 3-years. Here are those results. Now we can find some comfort in this approach where is shows 9 winning trades and just 2 losing trades over the last three-years. WHAT HAPPENED There are patterns to stock behaviors before and after earnings and those patterns reveal opportunities in the option market, without taking the actual risk of earnings. You can find them, stock by stock, Apple, Google, Netflix and of course Autodesk Inc are just a handful of examples. There has been edge here with this strategy. To see how to do this for any stock and for any strategy with just the click of a few buttons, we welcome you to watch this quick demonstration video: Tap Here to See the Tools at Work Thanks for reading. Risk Disclosure You should read the Characteristics and Risks of Standardized Options. Past performance is not an indication of future results. Trading futures and options involves the risk of loss. Please consider carefully whether futures or options are appropriate to your financial situation. Only risk capital should be used when trading futures or options. Investors could lose more than their initial investment. Past results are not necessarily indicative of future results. The risk of loss in trading can be substantial, carefully consider the inherent risks of such an investment in light of your financial condition. The author has no position in Autodesk Inc (NASDAQ:ADSK) as of this writing. Back-test Link