Expert technical analysis of financial markets by JC Parets
When the facts change, I change my mind. What do you do, Sir? ~ John Maynard Keynes
This quote has been on my mind as I am about to publish a trade idea that runs contrary to an existing position we’re currently carrying. And if the Market Gods are smiling, we may be able to win on both of them! [Read more…]
by JC
The cool thing about working with smart people is being able to learn from them. Having Sean McLaughlin on our team has made everyone better, not just our clients but us as well. In today’s video, we tackle the question of when it makes more sense to finance an options position by selling a different contract to collect the income vs simply just buying calls or puts. As usual, Sean does a nice job of explaining this in a way that anyone could understand. [Read more…]
You’ve probably noticed a few recent blog posts and twitter comments from the All Star Charts team singing the praises of “cash”. There’s nothing wrong with cash as a position if there aren’t any compelling ideas to get you excited about. In fact, its often the best move.
However, we options players can still structure trades that will profit in sideways markets. But a big challenge currently is that we prefer higher options prices driven by relatively high volatility to sell into — and its hard to find that anywhere right now. Across the board, options prices are getting extremely compressed everywhere. What to do?
How about a strategy that positions us to benefit from sideways action while also getting a goose from any reversion to the mean (er, higher) volatility? [Read more…]
One options strategy that we occasionally employ at All Star Options is a bullish Risk Reversal. This is a trade we like to put on when the cost of naked calls is too high for our comfort (due to high volatility and/or higher priced strikes), and we’re comfortable taking ownership of long stock in a “worst case” scenario.
Simply, it is a trade where we typically purchase an out-of-the-money call, and finance this purchase (all or in part) with the sale of an equal amount of naked puts in the the same expiration cycle.
This is an advanced-level trade that requires more buying power than most trades we put on (due to the naked puts component) and a higher level of comfort with risk. A typical risk reward graph would look like this: [Read more…]
Imitation is the best form of flattery. And we liked our trade idea in $WYNN so much that a nearly identical play setting up in a completely different sector warrants us the opportunity to repeat the same mechanics. [Read more…]
There’s something appealing about stacking edges in my favor while taking a shot on the short side of a casino stock that gives me a little extra juice. Waitress? I’m going to need another cocktail… [Read more…]
On last night’s All Star Options monthly conference call, we laid out a play to buy a potential bounce in a leading name in the materials sector. For completeness, the trade plan is below. [Read more…]
by JC
This is the video recording of the March 2019 Conference Call for Members of All Star Options [Read more…]
