Blog

The Market Taker Take: Option Trading Blog

Trading an Iron Condor During Earnings

We are getting closer to another round of quarterly earnings, so this may not be the best time to talk about a relatively neutral strategy. But I think it is always a good idea to learn more about different option strategies. An iron condor is a market-neutral strategy that combines two credit

Read More »

How to Trade ‘in the Zone’

It was the mid-1980s and I was in my mid-twenties when I stepped on the CBOT trading floor as an employee. I was terrified, intimidated and eager. I got a jacket with team colors, a badge for access to the pits, and a warning to keep my mouth shut and do what

Read More »

Learning the Option Greeks

As summer comes to a close here in Chicago, I have spent more than the usual amount of time over the past few weeks reviewing the option greeks in our Group Coaching class. It is always important to know about the greeks when trading options, but many traders neglect to properly educate

Read More »

Smart Traders Check Commodity Chains

In previous blogs I introduced a checklist of technical tests that I utilize before making a trade or writing my daily newsletters. A consistent approach is important to professional traders. Many investors are purely technical traders, some follow fundamentals, while others employ a combination of both schools of analysis. Fundamental data are

Read More »

What Has a Better Chance of Happening?

When it comes to technical analysis, there are certain indicators traders rely on. For me, monitoring simple support and resistance is the main way I feel I am putting the odds on my side. Support and Resistance Support is a level that keeps the underlying from moving lower. Resistance is a level

Read More »

Reduce Anxiety by Decreasing Risk

Tariffs, China, Hong Kong, Russia, Iran, inflation, central banks, recession, negative yields, inverted yield curve: All these terms have dominated headlines, and they incite anxiety for investors. Even agile short-term traders struggle in an environment where unvetted stories and half truths move markets. Rumors and threats in social media have had more

Read More »

Consider a Collar as an Investor

Although this last round of quarterly earnings is almost in the books, I feel the need to remind investors that options can provide protection even when earnings season is not going on. Let’s face it, the market is going to move lower like it did suddenly last Thursday, so it may be

Read More »

Big News From the Fed This Week

The Federal Open Market Committee has a mandate to promote full employment and keep inflation in check. It raises interest rates when the economy is overheating, and it lowers rates to promote spending or increase economic activity. Lately, Fed Chair Jerome Powell has taken a dovish or more accommodative stance. Many economists

Read More »

Support and Resistance on the 15-Minute Chart

If you know me even a little as a trader, you know how I feel about support and resistance when it comes to trading. I feel knowing that support and resistance has a better chance to keep the underlying advancing gives the trader a much-needed “edge.” As traders, we want to put

Read More »

Know Average Daily Range and Average True Range

Around holidays, especially in the summer, the participation rate often decreases, and subsequently so do volume and ranges. The typical seasonal lulls and end of each quarter are ideal times to do research and update statistics. I keep a spreadsheet with statistics covering average ranges over the most frequently analyzed time frames:

Read More »

Go-To Strategies for Any Market

As you probably know, there are several option strategies available to option traders depending on what the trader thinks the market and underlying will do. Of course, there are market risk, implied volatility bid/ask spreads and other factors to take into account as well. But every option trader should have a few

Read More »

How to Improve Trade Entry and Exit

One of the more difficult issues traders face is choosing prices that are apt to be extremes, or highs and lows, over a given time frame. Pinpointing daily entry and exit levels, also known as support and resistance areas, requires a view of recent history of the market you are trading. When

Read More »

Key Candles to Add to Your Trading Toolbox

All technical tools work at times, but none work all the time. The trick to technical trading is to identify when an indicator is likely to detect a high percentage trade. I have studied many charting techniques and tools in my 30-plus years in the commodity markets. Whenever I came across a

Read More »

How to Trade This Options Market

This is just a little blog to remind you about your options trading management. Everyone needs reminders, especially option traders. I will often say in my Group Coaching class to know exactly what you will do no matter what happens before you enter any trade. The same can be said about the

Read More »

Trade Talk and Tweets: the New Fundamentals

Fundamental data are also known as event risk. Professional traders keep a close eye on the economic calendar for events or reports that could alter a trend or start a new one. A treasury trader might hedge a long position by buying 10-year note puts or selling calls just before employment or

Read More »

How to Save Time Analyzing Markets

Since leaving the trading floor at the Chicago Board of Trade I’ve been tethered to my desktop computer. My office is my workshop, and all the tools I need for trading market analysis are there. Since the futures markets virtually never close except on Saturday, the leash to my tools is short

Read More »

How to Catch Directional Moves

One of my chores is to write a weekly piece that enlightens traders. At times my interpretations are spot on, almost prophetic. And sometimes I am clueless. My 30 years of experience in the futures markets has taught me to accept, almost embrace, being wrong. Traders must embrace risk. No one likes

Read More »

A Bullish Trade Setup to Consider

The market remains predominantly bullish, and we have considered potential bullish trade more than a few times in our Group Coaching class. One setup I continue to love is the 2-bar bullish break from a bullish base. When a Bullish Base is Created? A bullish base is created when a stock moves

Read More »

What Makes a Well-Rounded Trader?

I was fortunate to spend most of my career at the Chicago Board of Trade as a broker in the 30-year bond pit. The ’80s and ’90s were the heyday for interest trading pits. Most days were filled with big swings and lots of volume. The pits were packed and often became

Read More »

How Do Option Collars Work?

The market has been on some run since the holidays. After investors were worried that stocks would continue to sink into 2019, many stocks have recovered quite nicely. If you are a smart investor and know what an option collar is, the threat of another decline is not as scary. If you

Read More »

Think Like a Pro Trader

Spend time with a broker or pit trader from the era when all trades were executed at an exchange and you will learn about the auction process and the information it provides. Pits were created to facilitate trade. To an untrained eye a trading pit looks like a mess of mad, aggressive

Read More »