Option trader blog

How do I sell OTM put options? SELL some OTM put options! Watch my FREE videos on YouTube and learn to SELL options. Comment: I decided to go ahead and buy back my put for 5 cents just to be safe. United States Hello and thank you for visiting my blog. SELL options and GET PAID up front. LILIA has empowered students from Northern California, Southern California, the Midwest, the East Coast, the South, Guatemala, India, Canada and Thailand. How did I manage a losing trade? That was pretty amazing. Watch my FREE videos HERE!

How did I turn a losing trade into a winner? Watch my FREE videos HERE. Why did I close the trade? How do I sell put options? Expiration Monday, I chose to buy back my short puts at 5 cents just to be safe. You will notice that my trading strategies are relatively simple yet consistently profitable. Comment: This had been a difficult trade, so I decided to close it, take my profits and move on to the next trade.

The author of this blog is not a financial planner, money manager or broker. SELLING options is the most reliable way to generate consistent profits. The probability of success is much higher when you SELL options. Why did I place this trade? IV30 to jump 21. One of the toughest concepts for traders is to keep your winners and let them ride, and cut your losers. Amarin is a name that has been coming up on my option scans for a couple months now. Chinese solar stocks rallied today on massive stock volume.

This was an idea that came to me this weekend while watching Football. Tech, as it has outperformed its peers by a wide margin to start 2012. My two main passions are football and the stock market, so I like to relate the two as I always see similarities, in the end, both are about winning. Apple saw a few large blocks of calls and puts trade in October options on Monday and Tuesday this week, much of which was adjusting former bullish positions highlighted, but wanted to take a look at the positions with a focus on the new positions that are currently open. PG January 2013 calls. As most of you know by now I look at every stock on three elements, fundamentals, technical view, and money flow sentiment, specifically options activity.

One of the many advantages of trading options is that you do not need to pick a direction to have a winning trade, you can use indicators and statistics to set up high probability strategies that are Delta Neutral. After 16 months of fatherhood it also becomes clear that it is a question I want to answer as I have no doubt that time is the most valuable commodity in the World. BioTech large caps are seeing a resurgence. In this post I want to simply show how effective the approach is after hitting five monster moves over the past month. Understanding where options traders are positioned into key events, such as earnings, always gives you an edge up on figuring out the directional bias. Over the past year I have been working on a new venture which is now ready to launch. In tracking Institutional and Unusual Options Activity one of the most important things to do is to look for themes. Anyone following me the last few years on Twitter knows I have been one of the most bullish people on this market, and consistently bullish, not wavering back and forth, always seeing value in the market on any dip.

This morning in the Options Hawk Trading Hub I was looking at a few names that have been beaten down, mostly on earnings, and many with large gaps, that are starting to show signs of basing. ADX is climbing after a bullish crossover and RSI is rising, although a bit overbought. Internet identifications is likely to continue to experience strong growth, and recent price increases should boos the bottom line. With options activity I look at two types that are important. Dow Jones, but in the Options Hawk Trading Hub there are opportunities to make money on the long side and short side every day with constant flow of actionable analysis on the market and individual stocks. Day I have some free time to clarify the Options Hawk subscription products. It is Friday, so will keep this short, and hopefully sweet. Due to the Holiday, shares will not open for trade until next Monday. Earnings season is like Christmas for option traders, and it comes 4 times a year.

Company in my weekend scans that I have never heard of previously. The smart money has much better information access and you and I can do all of the technical and fundamental analysis in the World, but still not have the advanced trading tools that the Institutions have, and they are the ones moving the market. Philip Morris really caught my eye as a large trade that makes a lot of sense with the current Technical and Fundamental outlook. Outdoor Business into a REIT and divest its European and Asian Outdoors Business. This applies to trading options, just as it does with stocks, although options allow more flexibility to adjust positions while winning, or while losing. Technology sector down with it. VAL was a name consistently highlighted to clients with unusual options activity.

April 20th after the close, and it will be the first real news out of the Company since it crumbled 21. At OptionsHawk we are constantly creating new tools to allow traders to be more informed in decision making, and earnings season is a time that the site really excels with unparalleled research and analysis. Discovering trends in options activity often leads to the highest probability trades, and the recent trend has been large opening positions in commodity names, mainly the metals. Defense Sector is hot and the stocks are breaking out. Tender Offer Price, and shares jumped 38. profit last report, but FY12 guidance was near the high end. Similar to the same types that like to say Amazon. Although the Dow Jones actually finished up a point today the market sure felt much weaker. The standard ratio is not as bullish, as it has been moving sideways for nearly two weeks. The indicators are still in bullish agreement with this move, but there are a couple of potential overbought sell signals setting up. We bought puts to enter the trade, so one knows exactly what his maximum dollar loss of money could be. In this trade, we buy RBOB Gasoline futures and sell Heating Oil futures.

Stock prices continue to rise, in general. Breadth is probably the weakest area right now, as it has been waning for several days now. That means they are still on buy signals. This has been a successful seasonal trade in many years, and the last two years were the second and third best years in our history. However, we are still of the opinion that this market is tiring out and the sell signal still has a good chance to work. SPX chart remains bullish, in that it is rising, and all of its trend lines are rising as well. There is support at 2510, 2480, and 2400. Since that Band has raced away to the upside, we have a trade that is sort of in suspended animation if you will. SPX chart remains positive, with support at 2510.

In the traditional sense, there is support at 2510, 2480, and 2400. SPX chart in Figure 1 is still a bullish chart. February contracts, which is what we use for this spread. SPX chart bullish, of course. When the bears fail to capitalize on a selling opportunity such as Thursday, the bulls come back with a vengeance. SPX chart is in a strong uptrend, and that is simply bullish. The strength of the market was on full display this week.

The moving averages are all trending higher. SPX has been moving sideways. But at current levels, there is room for a modest correction without completely rolling over into a bear market. There does seem to be a slowing of the upward momentum, but considering how overbought the market had gotten, much more was expected of the bears. SPX roughly at 2557. The McClellan oscillator reached oversold territory on Wednesday and the Stochastics indicator was almost there. Even more aggressive is UPRO, which is triple leveraged. The information provided on this site is for education purposes only.

Seems like a lost opportunity in retrospective but time has taught me to follow the rules and be disciplined. The author is not a registered financial adviser and the ideas discussed on the site are just trading analysis and not recommendations. Time to reflect Options trading results for the month of October. There is no guarantee for those comments to be accurate. Of course, during down days you will also get multiplied pain. The Weekend Portfolio Analysis will be available on this site next week for historical reference. Despite the small price decline, we almost reached an oversold condition, which would have triggered a December RUT Credit Put spread. Remember not to risk money that you cannot afford to lose.

No free lunches, as usual. If things go well and the index rallies, you will instantly have superior returns. To pick off extreme highs or lows it is useful to refer to history using bell curves, more commonly known as market profiles. The reason is the implied volatility rises because there is an expected move because of the announcement. Having said this I also know that most of you will not be committed to do this at first. But if you have ever held a long straddle over an earnings announcement, you have probably witnessed the effects of implied volatility whether you realized it or not. Markets often go into rest or consolidation phases after trends. If you never write them down they never exist outside of your thoughts.

The dimension of time by price may not only help time the odds of a breakout, but it may also help project how long that trend is apt to last. If you never write them down they are simply just dreams. Certainly, the position can be held over the announcement but the added uncertain risk should be considered. From these structures the fair price is obvious, hence momentum can be ascertained when a fair price is violated. With November almost here, it might be a good time to give yourself a mental break if you have been trading, and reflect on your results before the holiday season begins. All you need is some money, charts, and a platform and you are on your way. When searching for optimal entry and exit levels, history can be a great help.

Bell curves track time at price and reveal high volume or fair prices. Long calls have positive delta, short calls have negative delta, long puts have negative delta and short puts have positive delta. Earlier this year when Valero Energy Corp. The great thing about options is that there is a variety of ways to profit with them depending on the outlook and method. This I promise you will only help you achieve the potential success you are after that much quicker. Have you ever wondered what truly makes a great options trader? Time at price allows us to track where buyers and sellers transact most often. How does one learn to trade options? Expanding time frame from days to weeks or even months can reveal nuances that may not be apparent with a narrow view.

Delta works the same for spreads but there is an element that many option traders may never think about that may actually change the way they think about delta as far as spreads go. As a general rule of thumb, option prices tend to increase as a volatility event like earnings approaches. The second chart shows the same data as the first but in a longer time frame. It might sound silly but start by asking yourself if you are the great options trader you thought you would be by now? Now the fair price is prevalent. The first AAPL chart shows daily profiles. Option Trading is Simple and not difficult Right? One of the most important things to know as an option trader in my opinion is option delta. During a consolidation phase price action is often choppy and the fair price is difficult to define. Although past performance is not indicative of future behavior, you would like to find a stock that has a history of price volatility ahead of the announcement.

Therefore, to recognize a change in direction and catch a trend early it is vital to define a fair price. The DIA monthly chart shows price action since January 2017. Are great options traders just born that way? Delta values range from 0 to 1 and can be positive or negative depending on if it is a call or put and whether the trader is long or short the position. On the other hand, a close above the fair price indicates that bulls have taken control of momentum and probability increases for a breakout to higher levels. If you are in Group Coaching, we will talk about several of these opportunities in the coming weeks. Such changes are more perceptible when using profiles to organize data. Keeping it simple, for every dollar the stock moves higher or lower, the option premium should change by that amount.

My Group Coaching students hear me repeat this often. There are plenty of indicators that are meant to alert traders when a market has move too far, too fast. They tend to lose their focus and their original goals when the going gets though. It is common to see extremes made when old very low volume prices are revisited as well. This is why a long straddle will lose money if the stock does not gap enough to overcome the volatility crush the next trading session. Above average TAP frequently occurs before breakouts. Options trading looks not difficult and which in turn can and often does, makes you lazy to work at it. Putting on this position should be considered anywhere from about two to four weeks before the expected earnings announcement. Delta is the rate of change of the price of the option relative to the change in the underlying.

Why does anyone want to become a options trader in the first place? Profiles display time at price. As the earnings date approaches, the IV of the options should increase. The weekly and monthly charts below illustrate support and resistance areas while highlighting high volume prices and low volume areas. When attempting to pick off highs and lows it helps to know what type of levels tend to provide support and resistance. Just as markets move too far too fast, they sometimes spend too much time at price. Be committed to your success. These gauges may reveal when a trend has run its course and are often used to time the exit of a trade at a peak if long or a valley if short. The tough part is pinpointing where an extreme is likely to form.

When expanding the time frame to a week the fair price is more pronounced. Consider taking a look at this from another perspective. When entering or exiting a trade the goal is buy when prices are cheapest and sell when too rich. Note that during the rally high volume or fairest prices provided support nearly every month. But what if the trade is exited before the announcement? Your goals have become something you can see and say out loud.

Often the changes in momentum are subtle. The farther out an expiration is chosen, the position will have a smaller negative theta but will not enjoy as big of an IV push higher as the expiration that takes place closer to the announcement. Consider exiting the position ahead of the announcement or maybe when a profit or risk level has been met. With the next round of quarterly earnings quickly approaching, it feels like a good time to talk about an option method that revolves around the expected volatility event. January expiration bull call spread with just over a week to go until expiration. Generally looking at the previous four earnings should give you an indication.

The second chart shows weekly profiles. Probably, because they want to become wealthy and very successful. Projecting how long a trend will last is a difficult, some think impossible, task. Is it really shocking to know that most people never achieve what they want out of life? When time at a fair price is above average, odds for a breakout increase. The closer the expiration is to the announcement, the more you can expect IV to increase along with the premiums. That being said, I still find delta to be still one of the most important concepts to understand particularly for my style of option trading. This is what you plan on capturing in regards to profit, the stock moving a decent amount in one direction and at the same time, the option premium increasing due to the implied volatility increasing.

Markets frequently go through a period of choppy trendless trade before the onset of a trend or reversal of one. This of course cannot be done with an equity position because a long and short stock position would cancel each other out. TAP with below average range. The holy grail for a trader is to hop on a trend early and ride it to the end. Americans write down their goals. An efficient way to learn how extremes form is to see it happen. The rally the following week extended about the length of a normal week. The downside is, negative theta will be bigger and work to offset the IV increase.

The most important part of having goals is to write them down. The tradeoff here is expiration. If you are committed to success then you must be committed to reaching your goals. Ideal trade location is one of the most difficult tasks for traders. After I decided to fully commit myself and write down my goals and everything that I learned along the way, did the tide finally turn and the results did too. After the earnings release, implied volatility and option prices tend to revert back to the mean and immediately drop right afterwards. There are indicators used to recognize when a market is ready to trend, but not many that tell how far that trend will travel.

Does being smarter necessarily give you an advantage in options trading? Of course, as you move through your option trading career and learn more nuances and specifics about options, you discover there are more option greeks than just delta to comprehend. This is a good explanation why it will probably take you a lot longer than you think before you really get a solid grip on it. Let me leave you with this before I end this introduction on how we are going to build a great options trader out of you. We need to establish a fair price to determine momentum. You probably never looked at it in that way huh? Price action is often erratic leaving few if any clues regarding momentum. Total August Income 71. Total March Income 76. Total September Income 48. Option Trades Another month of average trading and slowly turning the ship towards the right course. Total October Income 33. Option Trades Not a lot of trading going on in September.

Sometimes, but rarely, people just go out into the wilderness and. This post is the third in a series on how to analyze and fix your trading. Just seven trades for the month with two losers dragging me down. About two months before I spent. After some examination of trades over the year and. My foray into options trading was a fiasco and I was on the path to losing my whole account. March was definitely a month that put me back into stride with where I ended 2016. This was just an ugly month. Iron Condors this month at a loss of money which pushed me. Total April Income 72. It would seem the theme for this Income Report is to play catch up. When you read through options education books, very few actually recommend starting with learning spreads.

Pain is usually a direct result of your trade size. TT: Do you have any advice for people new to options trading? Do they tend to be more directional, neutral, or a combination? Every Saturday morning, I download all my trades, and I look at the delta efficiency. Limit your universe to about 10 to 15 underlyings and get comfortable with those. This week, tastytrade was lucky enough to have Vic Honnaya stop by our studio on the latest episode of Rising Stars on the tastytrade network. TT: What is one of the biggest takeaways you have learned from tastytrade? TT: Do you have a particular method you like to use for your earnings trades?

Anatomy of a Trade as well as taking mechanical exits on winners. This earnings season, I placed about 50 trades. But then when I saw I could turn around a bad trade, that changed things for me. TT: How do you allocate your capital per account? Do you look at a certain percentage? Managing winners early is key. It helps in terms of creating a high number of occurrences. TT: Do you try to make trades that have a certain range for probability of expiring?

TT: When you extend your duration, are you willing to work with a trade rather than close it out? YTD, which is helpful. GTC order the night before. TT: Do you trade futures? If you have the loser, but you can handle the pain, then you have the option to extend duration. This greatly increases your probability of turning a loser into a winner. Tom Sosnoff and veteran trader Tony Battista.