JC had a great post this weekend about our favorite Magazine Cover Indicator violator — The Economist. Go give it a read and then come on back here.
Are you caught up? Good.
You read what JC said to do. Let’s do it. [Read more…]
Expert technical analysis of financial markets by JC Parets
JC had a great post this weekend about our favorite Magazine Cover Indicator violator — The Economist. Go give it a read and then come on back here.
Are you caught up? Good.
You read what JC said to do. Let’s do it. [Read more…]
Strazza and I did The Flow show earlier this week in which one trade that stood out and caught my interest was a juicy short squeeze candidate.
Checking back on it today, the stock still maintains a short position greater than 20%. That means more than one-fifth of all shares outstanding are held by people with a short position. And if this stock starts busting higher, the only way traders holding a short position can end the pain is to buy the stock.
This can potentially fuel a rapid rise in share prices (see: Gamestop $GME circa early 2020).
I’m certainly not calling for a repeat of past meme stocks short squeezes here, but in this case, we’ve got a stock that’s chart is in the middle of completing a beautiful base and short holders are no doubt keeping their fingers near the trigger to exit this position quickly if we see some follow thru to the upside.
That creates opportunities for us.
In recent weeks, I’ve gotten several questions from subscribers to our Paid-to-Play income generating strategy wondering about discrepancies in my ETF implied volatility values vs. what they may have seen from whatever data source they personally use.
In many cases, what people see in my recorded videos simply represents a snapshot of when the video was recorded. Implied volatility values for options are dynamically updating throughout the day as stocks and options prices change. They are constantly in motion.
The other more common issue is that different platforms use different (often proprietary) calculations in their version of options implied volatility.
This may be frustrating for anyone who is looking for specific values in order to cue trades to happen. Thankfully, I am not.
I preach this all the time – I’m not at all concerned about the actual volatility score of an instrument. I don’t care how it’s measured. I only care about relative values.
In the case of measuring whether volatility is “high” or “low” for a particular instrument, I’m only focused on where the volatility in the instrument is today, compared to where it’s been over the past 6-12 months – in whichever method is used to calculate the actual value. This is a practice of being present in the now.
In the case of selecting a high-volatility instrument to initiate a delta-neutral credit spread, I like to choose one with higher volatility than its peers. Again, I don’t care about the actual value. I only care about whether it’s higher or lower than its friends. Easy peasy.
If you get trade ideas from me and you see a different IV score than what I’m seeing, don’t overthink it. Think instead in relative terms.
Trade ’em Well,
Sean McLaughlin
Chief Options Strategist
All Star Charts, Technical Analysis Research
Whoa baby. This might be a fun one. Or not. Either way, we’ll likely find out pretty quickly.
Chinese stocks continue to offer up interesting opportunities. And today’s trade is no exception. And to play it, we’re going to do it in a fairly aggressive manner, but with a tight risk management stop.
Let’s get right to it. [Read more…]
We’re already long some domestic semiconductor stocks via options (the trend is working). However, perhaps we’ve set our sights too close to home.
International stocks have been on a tear recently, showing even greater strength than the U.S. So maybe we should be looking for the strongest stocks, in the strongest sectors, in the strongest countries?
With this in mind, today’s trade takes us to Switzerland.
I’m an amateur chartist, at best. If you want charting experts, I’ll refer you to my team here at All Star Charts.
That said, I’ve got my eye on what appears to be a bullish flag forming in a hot Chinese stock and it looks ready for liftoff. Coupled with cheap options pricing, we can neatly define our risks and position ourselves for a big win. [Read more…]
[9/7: updated stop to 56]
As promised during yesterday’s The FLOW show, I’m following up on a possible trade idea we discussed.
However, after Strazza and I put our heads together with the rest of the Analyst team this morning, we’re going to attack an opportunity in Schlumberger $SLB from a different angle — one that can be rewarding regardless of which direction the stock takes.
It’s easy to follow a trading plan when the price action is moving our way. We feel like geniuses.
Look at me! I’m so smart! The stock market is doing exactly what I planned for it to do! Let’s go car shopping!
But how do I feel if the price action goes the other way?
Assuming I’ve put a trading plan together that accounts for both the possibility of being right AND the possibility of being wrong, why should I feel any different when the price goes the wrong way?
What’s the point of putting together a detailed trading plan if I later exit the position following the first price move in the opposite direction I hoped for?
Why go through all that effort? [Read more…]