Where I live in Colorado, we received our first snowfall of the season. And it meant business. Today, we woke up to 8 inches of overnight snow and it kept falling all morning. Yesterday, it was nearly 70 degrees and sunny. It’s the time of the year when seasons change quickly around here. Not unlike the markets this week.

My wife and I have both been more mindful of our diet this year, and our four year old son is growing like a beanstalk. And as the season is changing rapidly, we find ourselves scrambling through our closets looking to locate last winter’s clothes, only to find most of them don’t fit any of us. So, comically, we find ourselves a little ill prepared for the new winter.

This all feels very fitting as the markets most definitely and rapidly changed seasons this week. And we were still wearing a lot of last season’s positions. As you can imagine, that left us pretty uncomfortable.

The good news is, with a new outlook, we find ourselves scanning what appears to be a wide open field of very tempting short positions. But with this new season, we’ll have to come to battle with some new tools and strategies. Very few of the strategies that worked most of the year will work in this new season. Of course, we know this because nothing lasts forever in the market.

With this in mind, let’s get to work… [Read more…]

What a week, eh?

Long trades getting blown up all over the place. Luckily for us, we’d had a good run coming into last week with opportunities to take profits in a lot of our positions. That makes the exits and adjustments that have been forced upon us the last few days a bit more palatable. In both cases, the profits and losses were taken according to our plans as laid out when we entered into the trades in the first place. Weeks like this are a good reminder of why we put trade plans together up front to begin with. When markets start getting wacky, the last thing we want to be doing is scrambling in the wind, trying to keep our heads about us as we’re struggling to assemble puzzle pieces on a board that won’t stay still.

The good news is, rising volatility will likely offer us some good higher probability income trades in the coming days and weeks to hopefully more than make up for this week’s reality check. [Read more…]

U.S. stocks gave everyone a little reminder last week that stocks don’t always go straight up in Bull Markets. Significant gains will be seen in the drivers of every bull run, but not without pauses and pullbacks along the way. Overall, we’re still bullish here, but more cautiously so and looking to minimize our risks on long plays as best we can.

If the markets are currently undergoing a pause that refreshes, then we expect the resumption to highs will be lead — at least in part — by semiconductors. With that in mind, we want to be buying dips amongst the leaders in this space and we have a great candidate lined up. [Read more…]

We’ve got 46 days until November expiration and it’s always good to have some income trades on for every monthly expiration. It just makes good sense for somewhat diversifying our portfolio. We don’t want to have only directional and/or long premium plays on. If the market goes sideways or falls somewhat from here, we need to have some cushion built in somewhere.

After reviewing all the most liquid ETFs we track, I’ve identified our best candidate based on relatively high implied volatility and range-bound trading action. [Read more…]