2016 was a year of learning. The market was a proverbial rollercoaster, with ups and downs and twists and turns that could make even the most seasoned trader a bit sick to their stomach. As we move into the 2017 trading year, we have to look back on 2016, and the lessons it provided, as…
Read MoreThe Path Towards True Economic Growth
We are in the midst of what some call the “Trump Tirade”. Stocks have been on a substantial rally, and the only question people seem to be asking is “how high can it go?” Not, “when is it going to revert back?” or “when will people realize that the market is grossly overvalued?” Instead, it’s…
Read MoreDumb Money vs. Smart Money
Right now, it seems as though the market can do no wrong. It has been on steady increase the past few years, simply chugging along. Small investors are cautiously beginning to enter the marketplace, as their hope in a better tomorrow rises along with the price of stocks. But as the stock valuations continue to…
Read MoreIV Rank and Strategy Selection
As we primarily sell options, we prefer to sell expensive options, which equates to selling high Implied Volatility (IV). We use IV rank to determine when IV is high compared to the underlying’s previous year of option prices. IV Rank = (Current IV – Minimum IV) / (Maximum IV – Minimum IV)
Read MoreIntraday Reversal and Implied Volatility
How often does the market reverse? Are indices more likely to reverse when implied volatility is high, or low? Trade reversals are defined as open higher reversals, in which the market opens above and then closes below the previous day’s close, or open lower reversal, in which the market opens below and then closes above…
Read MoreDOW 20,000: Is it Really Something We Should Be Excited About?
It’s been in the news for weeks. “DOW APPROACHES 20,000!!” The news anchors say excitedly. Newspaper headlines blare: ECONOMY IS IN RECOVERY. UNEMPLOYMENT IS AT AN ALL TIME LOW. MONEY IS LITERALLY RAINING DOWN FROM THE SKY. But is the DJIA hitting 20,000 really a good thing?
Read MoreButterflies: Regular and Broken
Butterflies are a fun trade if you are looking to put a little more capital into the market, and have a neutral assumption on the stock. Normally, butterflies are set up Out-Of-The-Money so you pay a small debit for the trade, rather than collect a credit (I prefer to collect credit on most of my…
Read MoreThe Key Tenets of Trading
STRATEGY DIVERSIFICATION STAYING SMALL, TRADING OFTEN. UNCORRELATED UNDERLYINGS CONTRARIAN PLAYS
Read MoreOutlier Detection
Outliers are points that lie far away from other values. They are usually considered to be a 3 standard deviation move from the mean (assuming a normal distribution). The little m, or mu, as it is called, represents the average for the data set.
Read More