Dow Jones 30 Quarterly Review
Each day in our futures group coaching class, we examine the major commodity sectors for patterns that frequently precede breakouts or trends. Our goal is to recognize trend potential, which prepares us to enter trends in the early stages. There are several conditions that must be met before a market can be tagged as high […]
Option Contract Size – Full, Half, and Nibble
As I often say in my Group Coaching class, you have three different sizes to choose from as far as contracts go. A trader can select an option contract size based on his understanding. Here is a short blog to shed some light on how I personally choose between them and a few of the […]
Know What You Will Do
I have a saying I like to use in my Group Coaching class, and I repeat it frequently throughout the week. The saying is, “know exactly what you will do no matter what happens.” What this boils down to is having a trade management plan in place before you enter a position. As we have […]
Working on a Trading Weakness
From the Journal of a Stay-At-Home Trader: Struggles on the Journey I’ve been pondering something I wrote a short while ago: “See, the way I look at it, a weakness in this context is something that can be strengthened through study, practice, perseverance and lots of good, old-fashioned hard work. It is similar to one’s muscles […]
Sifting Through the Trading Noise
Special Guest Post At any moment during the trading day, at least five traders with different time horizons are looking at price and volume of any security. There’s the scalper, who wants to be in and out within minutes and is often the first trader on the other side of any transaction. There’s the day trader, who typically has no […]
Overcoming Mental Roadblocks in Trading
From the Journal of a Stay-At-Home Trader: Struggles on the Journey So much of trading is mental. A newer options trader clearly should become familiar with the mechanics of options. But even after one understands those fundamentals, one can still struggle with options trading when there are certain psychological and emotional blocks that must be overcome. Fear – Fear can […]
Trading for Balance
When a market is balanced, it has found fair value. When a market is trending up or down, it is considered imbalanced. Some common terms that describe this contrast are trend vs. trade, run vs. rest, consolidation (horizontal) phase or directional (vertical) move. The ability to recognize when one phase is near an end and […]
Rolling too Soon
Selling premium has so many different risks and nuances it can drive an option trader crazy. But there is a common problem I see among option traders particularly when covered calls and time spreads are involved: They tend to roll the short position too soon. Let me explain a bit more in detail below and […]
Patience During Uncertain Times
From the Journal of a Stay-At-Home Trader: Struggles on the Journey As a short-term swing trader, things have been tough for me lately. Although the overall market has been bullish, I think there is a tenuous edginess to it all. A position in an individual equity can be up one day, significantly down the next […]
Learn Fundamentals Through Technicals
Recently, there have been some massive moves in stock indexes, treasury futures, precious metals and energy. Each sector moved in response to unexpected news. Every week there is a list of upcoming reports as well as estimates of what the data will reveal. Professional traders track consensus estimates so they can react accordingly if the […]
Learning Options not Strategies
From the Journal of a Stay-At-Home Trader: Struggles on the Journey When I was newer to options trading, I studied just about every strategy I could get my hands on. Most people who touted a particular strategy had wonderful win records and promoted dreams like, “Make money easily in your sleep! Wake up every single […]
Understanding Bitcoin Futures and Value
There are many reasons why investors shy away from Bitcoin and other cryptocurrencies. Volatility, liquidity, lack of intrinsic value and historic data are near the top of the list. But now that there are futures contracts for Bitcoin, it is gaining popularity and credibility. The search for intrinsic or fair value usually includes violent price […]
The Greeks: Sometimes Friends, Sometimes Foes
From the Journal of a Stay-At-Home Trader: Struggles on the Journey I admit it. I actively avoided the Greeks for a very long time. When I came across Dan Passarelli’s Trading Option Greeks — the first edition — I added it to my Amazon wish List. And there on that list the title sat … […]
Crude Oil and USO Long-Term Targeting
Just a few years ago crude oil was going for about $120 a barrel. Then in late 2014 oil prices began a histrionic decline. Before all was said and done, oil dropped $80 over the next 16 months. The bottom formed in early 2016 and for the next 22 months we saw choppy trend trade. […]
Option Sayings Worth Repeating, Part II
A couple of weeks ago, I did a blog about a few of my favorite option sayings. In this post, I will add three more to the list and briefly try to explain what I mean. If one of them strikes a chord with you, then it was well worth it because each one has […]
Options Sayings Worth Repeating
My one-on-one and group coaching students hear me repeat phrases often. Why do I repeat them so frequently? I want them to know how important the lesson is and I want them to hear my voice when the situation arises and think about what they need to do or consider. I am going to cover […]
Is There an Effective Delta?
We talk about option delta very frequently in this blog and in my Group Coaching class and although the concept may be well-known to many of you by now, it still bears revisiting time and time again because of its importance. I would venture to say that once an option trader learns what a call […]
Do Trailing Stops Make Sense for Options?
The market has moved higher, lower and higher again over the last month or so. Even though the market has rallied as of late closing at all-time highs yet again, there’s still a potential for the market to move yet lower again. Regardless, whether the market continues to move higher or lower, it is always […]
Multiply Your Delta
In my Group Coaching class, I often give the traders a quiz with many of the questions pertaining to the option greeks. Despite delta being the most recognizable greek in most cases, option traders still struggle to determine how it truly functions. Even if you think you have a pretty good grasp of delta, I […]
Trader Checklist Guide – How to Win as an Option Trader
Spend time with a broker or pit trader from the era when all trades were executed at an exchange and you will learn a lot about the auction process and the information it provides. Trading pits are spheres of activity that appear chaotic to the untrained eye. But for a seasoned observer. a trading pit […]
Define Value and Define Risk
For traders, risk is one of the hardest things to define after entering a trade. Risk is a change in momentum. If a short position is taken due to negative momentum, that trade should be held until momentum turns positive. Conversely, a long position should work until momentum turns negative. To define risk, we must […]
