As November draws to a close, it’s time to review positions with December options that remain open (haven’t already hit profit targets or been stopped out).
Most trades I put on for All Star Options tend to have a minimum duration of 30 days (short premium plays) and often as long as 6-8 months (for long premium plays). As options approach expiration, greeks like theta and gamma start to become my enemy and whipsaw my P/L. Therefore, as options and spreads get into the expiration month, my best practice is to put each position on notice — it’s time to take action. [Read more…]
It’s been an epic trip to India and Japan for the All Star Charts team, so sorry for the decreased frequency of trade ideas during the past week. We’re on a plane now headed back to the U.S. and JC and I were chatting between in-flight meals (10 hour flight from Tokyo!) about some opportunities we’re seeing out our windows from 30,000 feet over the Pacific Ocean.
One such area that has our attention is the US Healthcare Providers space. Earlier in the week, our boy Bruni published a piece featuring a bunch of stocks to watch here.
The one stock that most caught my eye was one setting up for a hundred-dollar-roll and all-time highs. [Read more…]
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!).
Andrew Thrasher is the person I turn to whenever I have questions about Volatility and the $VIX. I know he tracks the data much more closely that I do and he does a good job of simplifying what may seem like complicated concepts. With the current market environment pricing in very low volatility moving forward, one can argue there is too much “complacency” towards stocks. Historically, corrections are sparked from this sort of setup. Who better to bring on to the podcast for this special Volatility Episode than Andrew Thrasher, winner of the 2017 Dow Award for his paper on Forecasting a Volatility Tsunami. In this conversation we talk about the current volatility regime, the VIX curve looking out into early 2020 and how he incorporates breadth data to supplement his volatility analysis. I really enjoyed this conversation and it seems like the perfect time to talk about Volatility! [Read more…]
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…]