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All Star Charts

Expert technical analysis of financial markets by JC Parets

How Do I Handle Theta Decay?

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A subscriber recently sent me this question:

Sean, what is your strategy for handling the impact of Theta on an open position? Is there a bailout point where the time decay outweighs the potential upside?

The answer is YES. Theta, as well as Gamma often become my enemy as we near expiration. Here’s how I approach it… [Read more…]

[Options Premium] Financially Speaking

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JC recently published a piece highlighting the action in the Financials space:

Today we’re looking at Financials pushing up against their historic 2007 highs for the 3rd time.

The way I learned it was that the more times a level is tested the higher the likelihood that it breaks through. I don’t know if this is going to be it, or if it will take a 4th or a 5th test. But I do think there is a blog post coming soon where we’re looking at Financials at all-time price highs.

Meanwhile, on a total return basis, Financials are already making new all-time highs this week.

Looking at these charts, it is hard not to be enthusiastic about the potential for a major breakout in this sector: [Read more…]

[Options Premium] Kaizen

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We’re seeing a pretty sexy opportunity set up in the auto space. <— that’s a sentence I never thought I’d write.

Even more sexy is the potential breakout could be from a nearly TWELVE YEAR BASE.  Mizutamari!!

Naturally, we want to go along for the ride. [Read more…]

[Options] When to Exit Options and Options Spreads

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I recently received an email from a subscriber asking about best practices in exiting options positions:

How do you automate managing risk on options if you want to define it through the base stock price? E.g. you have calls on MSFT that you bought based on MSFT holding support at $100. Do you auto-sell (put a stop loss) on the option based on the MSFT price, not the option price itself?

Good question. And the answer is no.  [Read more…]

[Options Premium] Casey at the Bat

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There are bullish setups all over the place. My friend Aaron couldn’t have said it better:

I agree. Lots to play on the upside. That said, lets not get crazy here. We still need to put ourselves in some high probability situations and not bet the farm on any one trade. So let’s take a look at a good opportunity in that vein. [Read more…]

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