Steady Monthly Income by, selling out-of-the-money near term options.
Out-of-the-money options, in the near term month, lose their premium rapidly as they approach expiration. An excellent strategy to take advantage of this phenomenon is to sell these options. Set-up the trade as seen below: Sell options on non-volatile indexes like the small cap Russell 2000 index (RUT). Sell options with a probability of […]
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Impact of Size
Even if your not an institution, there may come a point where the size of your trades impacts the price you receive. What size threshold behooves you to recognize (ala Heisenberg), that your interaction (interference) with the market, changes the market? In order to cleverly adjust order entry for optimal fills, market microstructure assessment is essential. […]
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The Importance of the Exit Strategy (Part II)
After entering the Abbott Labs (ABT) trade on 2/16 @ $46.77 and the May 42 call @ $5.05 we stayed with the trend until the beginning of April. At that point the call had yielded a great return. I was looking to exit at the first sign of weakness. Two confirming signals: Fibonacci extensions […]
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Confirming Signals
Whenever we look at a possible signal on whatever trading system or methodology you use, it’s always best to add confirming “sub-signals”. These smaller minor signals reinforce the original signal and make the trade much more reliable. I call these “Supporting Structures”. I use primarily a basic bar chart to read trend direction and […]
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Trend Analysis
All forms of technical analysis are arbitrary from the standpoint of attempting to indicate what should or could occur. They are also arbitrary to the extent they attempt to anticipate a change in the market’s behavior, say from moving up to down or vice versa. The one exception to this is a certain pure […]
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The Trend is not Always Your Friend?
Today on the CNBC TV channel, an old time trader and newsletter writer Dennis Gartman was very bullish on metals and bearish on the US Dollar. It sounds to me like a promotional script to attract the public to follow the trend. Is it time to respect historical levels and be a contrarian? […]
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Positioning For Collapse
Today’s trade in the June S&P continued the advance which came on the heels of the key reversal bottom which formed this past Monday. This three day advance fits perfectly with my expectation for the trend to reverse at the 4/22-4/23 time target. The post yesterday explained procedurally that I would expect the move to […]
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“Hi-yo, Silver! Away!”
Silver is now approaching the January 1980 peak of $50.20 per oz. Traders who follow historic data will watch this level carefully. To be a Lone Ranger and pick a market top, you will need a mechanical timing trading tool. This is what I discuss in my webinars. Happy Trading.
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Red Alert Continued
The strength we saw in the major equity indices today is more consistent with the market forming a top as we approach time targets of 4/22 and 4/23. Based on the notion that the market low that formed two days ago on 4/18 represents the start of a new thrust upward, the expectation is that its run […]
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Preparing for a Winning Trade
The two most important questions I ask myself when I analyze a price chart of any time interval to find trading opportunities are: trend direction (easy to see) and trend strength (critical to know). Knowing the answers allows me to choose one of two basic trade entries. I can either trade with the trend when […]
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