There might not be a bull market everywhere. It seems interest rates are taking a breather here and deciding their next move. And while they consolidate, options markets are currently pricing in some elevated premiums that are pretty tempting to sell if you’re a believer in options volatility mean reversion (I am!).
I know. I know. China.
Anyone else tired of the headlines? Or are you like me and don’t even pay attention?
Once again, all we do is follow price and let supply and demand lead us to opportunities. Leave the headlines to Johnny Piker.
So with that out of the way, lets take a look at an opportunity in the Chinese Internet sector. [Read more…]
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…]
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…]
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…]
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…]
There are bullish setups all over the place. My friend Aaron couldn’t have said it better:
<—– drowning in setups
— Aaron (@ATMcharts) November 4, 2019
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…]
As I do at the end of every month, I scan across my portfolio of open positions and observe any positions which hold options nearing expiration in the upcoming month. Today being October 31, I’m setting my sights on November expiry. [Read more…]