I agree. Lots to play on the upside. That said, lets not get crazy here. We still need to put ourselves in some high probability situations and not bet the farm on any one trade. So let's take a look at a good opportunity in that vein.
As I do at the end of every month, I scan across my portfolio of open positions and observe any positions which hold options nearing expiration in the upcoming month. Today being October 31, I'm setting my sights on November expiry.
I think it's fair to say we options traders -- and really all traders -- see and think about the world around us differently. I mean, who has conversations like this?
I've been noticing some mostly sideways action in the oil & gas space in recent months. And with premiums somewhat elevated in options, delta neutral income strategies become extremely appealing.
Selling premium when options volatility is relatively high is a repeatable edge that plays out in my favor over time. So I like to put myself in position to take advantage of these situations as often as I can -- ideally when the underlying is caught in a range and my analysis indicates the range is likely to continue.
I found a stock where earnings have come and gone with little impact upon the overall trend, volatility collapsed (predictably), and now the only question left to ask is: when does the Santa Rally begin?
Have you noticed that with Tech and Software and other areas grinding sideways or lower, we’ve seen a consistent bid in Emerging Markets? ...I really think the squeeze is on.
He was a little bit more, um, verbose in an email header sending this piece to his subscribers that read:
Emerging Market Shorts Will Get Their Faces Ripped Off
One of our bigger directional wins this summer/fall is showing signs of taking a breather, but traders with a memory are still keeping a bid under options prices. This is setting up the potential for a nice "income trade." When volatility is high (and therefore options premiums are juicy), and my bet is some sideways action in the near-term, these are the ideal situations to employ delta-neutral credit spreads.
The S&P 500 is back near highs. Call me crazy, but bullish setups in this environment with low volatility in the options get my antennae up for my favorite bullish strategy -- the simple long call. (Keep it simple, slugger!)
Warning: This aggressive strategy is only for those who are comfortable with risk and want to Bro Down ;)
In a previous post, I discussed using Vertical Spreads to roll long in-the-money calls up to protect profits while not giving up the dream of higher prices. Any time I'm holding long calls that are way in-the-money, this is a viable option to help me take money off the table -- freeing it up to be redeployed elsewhere -- but still leaves me a chance to participate if the stock continues moving higher (in the off-chance I didn't perfectly call the top /sarcasm).
I promised an aggressive cousin to this strategy and here it goes...
Sifting through all the trade ideas from the latest All Star Charts Quarterly Playbook, I happened upon a stock that is still several weeks away from earnings, is just a touch below all time highs, is trading at its lowest volatility of the year, and has a clearly defined risk management level. As you can imagine, this is pretty damn near the perfect set up for my favorite options play...