Sean McLaughlin, Author at All Star Charts Page

[Options Premium] Embrace the Muck

March 18, 2019 by Sean McLaughlin

You’ve probably noticed a few recent blog posts and twitter comments from the All Star Charts team singing the praises of “cash”. There’s nothing wrong with cash as a position if there aren’t any compelling ideas to get you excited about. In fact, its often the best move.

However, we options players can still structure trades that will profit in sideways markets. But a big challenge currently is that we prefer higher options prices driven by relatively high volatility to sell into — and its hard to find that anywhere right now. Across the board, options prices are getting extremely compressed everywhere. What to do?

How about a strategy that positions us to benefit from sideways action while also getting a goose from any reversion to the mean (er, higher) volatility? [Read more…]

[Options] Risk Management Best Practice with Risk Reversals

March 12, 2019 by Sean McLaughlin

One options strategy that we occasionally employ at All Star Options is a bullish Risk Reversal. This is a trade we like to put on when the cost of naked calls is too high for our comfort (due to high volatility and/or higher priced strikes), and we’re comfortable taking ownership of long stock in a “worst case” scenario.

Simply, it is a trade where we typically purchase an out-of-the-money call, and finance this purchase (all or in part) with the sale of an equal amount of naked puts in the the same expiration cycle.

This is an advanced-level trade that requires more buying power than most trades we put on (due to the naked puts component) and a higher level of comfort with risk. A typical risk reward graph would look like this: [Read more…]

[Options Premium] This Brand Doesn’t Feel So Fortunate

March 10, 2019 by Sean McLaughlin

Imitation is the best form of flattery. And we liked our trade idea in $WYNN so much that a nearly identical play setting up in a completely different sector warrants us the opportunity to repeat the same mechanics. [Read more…]

[Options Premium] Rolling the Dice

March 8, 2019 by Sean McLaughlin

There’s something appealing about stacking edges in my favor while taking a shot on the short side of a casino stock that gives me a little extra juice. Waitress? I’m going to need another cocktail… [Read more…]

[Options Premium] Material Bounce Candidate

March 6, 2019 by Sean McLaughlin

On last night’s All Star Options monthly conference call, we laid out a play to buy a potential bounce in a leading name in the materials sector. For completeness, the trade plan is below. [Read more…]

[Options Premium] Shippers in Shallow Waters

March 3, 2019 by Sean McLaughlin

If you’re of the mind that the broader stock market is set to top out soon, then it makes sense to start hunting for short selling opportunities amongst the weakest sectors. One sector ripe for this right now is the shipping sector. And one stock in particular is offering a rare opportunity to play the downside with straight long puts. [Read more…]

[Options Premium] Positions Review Headed into March Expiration

February 28, 2019 by Sean McLaughlin

We’re headed into another monthly expiration cycle and its time to take some action on open positions with options expiring in March. Not going to sugar coat it — March positions have been challenging! [Read more…]

[Options Premium] Low Risk High Reward Play in an Old Stalwart

February 27, 2019 by Sean McLaughlin

Don’t look now, but all-time highs are starting to pop up for some well known names. And after just completing the “hundred-dollar-roll,” we’ve got an old classic offering us a cheap opportunity to play for some outsized relative gains. [Read more…]