What’s the trade today?
Is it a long? Is it a short?
Is it a neutral trade?
In today’s video, Sean and I talk about what to do when there’s nothing to do!
Expert technical analysis of financial markets by JC Parets
by JC
What’s the trade today?
Is it a long? Is it a short?
Is it a neutral trade?
In today’s video, Sean and I talk about what to do when there’s nothing to do!
In Major League Baseball, the 40/40 Club is an exclusive group of players who are the only ones to have achieved both 40 home runs and 40 stolen bases in the same season.
The first player to achieve this milestone was Jose Canseco in 1988 as a member of the Oakland A’s – back during the “Bash Brothers” days with his steroids pal Mark McGwire.
Since then, only three other players have joined this list: Barry Bonds (1996), Alex Rodriguez (1998), and Alfonso Soriano (2006).
Here at All Star Charts, we’ve achieved a little bit of our own 40/40 dynamic as JC celebrated his birthday this week and joined me in the 40+ crowd of awesomeness. Perhaps it’s not quite as exciting as crushing home runs over the wall or swiping second base against catcher Yadi Molina. But I like to think it’s cool in its own way.
We’re not getting old, we’re getting seasoned – with a little extra sriracha.
Meanwhile, [Read more…]
As the market continues to test the resolve of both bulls and bears, some bearish setups are starting to trigger.
The team put out their latest Short Report last week and one of the names from that list triggered an entry this morning. And considering that my portfolio of options positions is currently leaning long, I like the idea of establishing some bearish positions to add counterbalance to my holdings.
So let’s get right to it.
While certainly not at panic levels, we’ve been seeing a persistent $VIX holding north of 20, and the last two days we saw it flirt with 25. This signals to me that there is still a bit of uneasiness remaining in the stock market, leftover from the recent correction.
Scanning my books, I noticed my portfolio is a little light on delta neutral premium trades, so we’re going to take the recent rise in volatility as an opportunity to add a little diversification.
As always, I take a gander at my list of the most liquid ETF options and look for the ones with the highest implied volatilities right now. And then if the chart suggests some consolidation is in order, that’s where I look to strike.
I have one trade that stands out head and shoulders above the rest as my number one F-up. I really screwed this one up.
Financially, it was my best trade of the year. Probably my best trade in several years…
But it still stands out as my worst trade of all time.
This was circa 2013. I had recently moved to Boulder, CO and life was good. New vistas, new friends, new environments, new everything.
And one thing I did which was new for me (at the time), was I had come up with a long-term bullish thesis on a stock. And over the course of a couple days, I wrote up about 5 pages of notes on my yellow legal pad outlining exactly how I’d play my bullish thesis using options.
The TL;DR version of my strategy is that I was going to purchase slightly out-of-the-money long calls with about a month until expiration. And then if/when the stock traded up and through the strike price of my long calls, I would take that opportunity to roll those options up and out to the next monthly series, using the proceeds from the sale of the existing ITM options to purchase as many new OTM options in the next month as possible. (For example, I’d sell 5 calls with Feb expiration for $5.00 a contract, then buy 7 calls with March expiration for $3.50 apiece. My position would grow in size, and I’d even extract a little leftover credit. Wash, rinse, repeat all the way to the moon.)
This was a super-aggressive, GO FOR IT! trade. [Read more…]
To quote Steve Strazza: “When commodity stocks go, they go!”
This pretty much sums up the talk we had this morning when coming up with today’s trade idea.
We were looking across the strongest sectors and hunting for opportunities to get involved. One challenge we were having is many of the stocks we liked had either already had a big move and we’d be chasing, earnings were on deck in less than a week, or the options chains were too thin for us to get good fills.
Finally, after some searching, we found a name that made sense. And it was one I wasn’t familiar with.
No, not Santa. He already came and went.
JC came to Boulder yesterday (where I Iive) and we were able to get together to enjoy a late dinner. It was a great opportunity to reflect on how far we’ve come and what we’ve already accomplished.
All Star Charts launched about 13 years ago. And we launched All Star Options nearly four years ago.
During this time, we’ve seen big bull runs, panic-inducing corrections, and everything in between.
But the one constant has been [Read more…]
I love when the team feels a little “frisky” and hunts for “speculative” ideas. There’s nothing that gets the creative juices flowing more than getting outside the wheelhouse a bit, looking for new experiences.
This lead them down the path of picking through the wreckage in Chinese stocks.
In the recent Monthly Candles Strategy session (find the charts here), JC highlighted a couple names in China that are offering speculative opportunities for those willing to step boldly where most bulls are too sheepish to look.
As options traders, we too can join the party. But we can minimize the risk better while still participating if the speculators have their way.