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The MTM Take

Watch Trade Truce’s Impact on Price Action

Last weekend Argentina hosted the G20 summit, which comprised 20 leaders from around the globe. There were three agenda priorities: the future of work, infrastructure for development and a sustainable food future. Trade and tariffs may not have been listed as priorities, but they certainly were. When the commodity markets opened Sunday

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Neutralizing Positive Option Vega

If and when this market decides to move higher, implied volatility and option prices are destined to come back down. If you have an option position with positive vega, this might be a bit concerning. If it is, and it probably should be, there is one way you can offset that risk

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How to Gauge Trade Patterns

In the first of the two SPY charts below, we see a steady rally in 2017 where the average month range spanned about 8 points. Then in January 2018 the range more than doubled the average bringing on an overbought signal. It was the last thrust higher that ended the nearly nonstop

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Comparing Bearish Vertical Spreads

As an option trader, vertical spreads are most likely an integral part of your arsenal as a swing trader. What makes them so worthy of your consideration is the wide variety of risk/reward scenarios depending on one’s outlook. Let’s do a quick comparison of two verticals with bearish outlooks. Verticals One of

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How to Select Strikes

Recently I have been reeducating myself with option strategies. It has been over 15 years since I executed an option order at the CBOT. After joining the MTM team, I viewed many of the teaching videos and listened to Dan and John K. talk option strategy with students. Thus, I am eager

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Consider the Close of the Market

When the market closes, there is never a guarantee of whether it will open higher or lower the next session. If we knew that, trading would be a whole lot easier. But there is something I look for on a constant basis that I have found helps me tremendously. It is to

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How to Read Market Sector Sensitivity

In the daily futures class, we search many markets for patterns that typically precede the start of a trend, as well as the setups that often occur when a trend is near an end. Our approach to trading is determined by pattern probabilities and relationships among commodity sectors. Recently the stock market

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Support and Resistance Works on All Time Frames

Support and resistance are an integral part of how I teach technical analysis to my group coaching students. The general premise is that support and resistance have better odds to hold than be broken. If you keep this in mind as a trader, you can increase your odds for success. But I

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How Liquidity and Time Indicate Trends

Trends occur when institutional traders enter in force. They push markets higher when their bids outweigh offers. And markets go down when large traders liquidate or sell. Wouldn’t it be nice to know when and where professional traders enter the market? If we knew that, we could catch trends earlier. Profit potential

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What You Should Know About Vega

We have previously discussed a few things I think you should know about the option greeks. In weeks past, we have looked at delta, gamma and theta, which now brings us to vega. Vega measures the impact implied volatility (IV) has on option premiums. Keeping it simple, for every 1% change in

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Using ATR as a Market Speedometer

At the end of every quarter I make it a point to update a spreadsheet that displays average ranges in most commodities, indexes, ETFs and Dow Jones 30 stocks. This information is crucial when projecting how far a market is likely to move over a variety of time frames. It is imperative

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What You Don’t Know About Theta

As our journey of taking a look at the greeks in a different light continues, we have come upon theta. Theta, for many, might be the easiest to grasp. That being said, here are a couple of things to think about that you might not have realized about this greek. Theta measures

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Using ETFs for Leverage

Stock prices for the highest rated companies are frequently too rich for retail investors. Trading futures can be expensive as well. Many choose to trade options on stocks and futures to keep costs down. Another alternative to trading or investing in blue chip companies is to turn to sector ETFs. There are

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A Couple of Things About Gamma

A few weeks ago, I wrote that I was going to discuss the greeks and some key items I have learned about that I thought would help you as well. We started with delta, and today we will continue with gamma. Gamma is the rate of change of delta based on the

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Top Picking and Bottom Fishing All About Timing

Growing up in Chicago had plenty of perks: a beautiful skyline and parks, plus great food, entertainment and sports. But for the harsh winters, it is my kinda town. After college I had the opportunity to work at the futures exchanges, Chicago Board of Trade and Chicago Mercantile Exchange. My first experience

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A Couple of Things About Delta

Over the next few weeks, I am going to talk about a few points that have helped me learn the greeks and have benefitted my trading throughout the years. For me, once I understood and comprehended these points, option trading was a little simpler to understand. Let’s start with delta. If you

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Using Futures as ETF Price Swing Hedge

Financial futures and correlating ETFs are sensitive to economic data, not just in the U.S. but abroad as well. When we wake up to trade each morning, a trade idea may have already played out and the overnight price action forces us to adjust strategy. Recently, the Turkish lira collapsed, and the

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How Contract Size Affects Option Greeks

Understanding the option greeks is pivotal to truly understanding and trading options. As I like to say, the greeks are like the controls on a car. They give you an idea of how the trade should perform based on the underlying, time and volatility. But one thing about the greeks that is

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Critical Market Impact of Monthly Reports

On the first Friday of each month, we get a look at the recent employment data. These numbers are often the catalyst for the start of a trend or the end of one. Job creation is an essential sign of a healthy economy. On the Fed’s scale of impact data that could

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Bull Call Spread in Netflix

Netflix Inc. (NFLX) recently announced earnings and the stock gapped and traded over $50 lower from the previous night’s close. In Group Coaching that morning after the gap, we saw the stock had started an uptrend. Looking at some conservative bullish option trades, we decided to model out an out-of-the-money (OTM) bull

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Using Bell Curves to Spot Market Trends

Trend and consolidate, run and rest, trend and chop are expressions often used to describe the two things markets do. They move from balance to imbalance and back. Different strategies are employed during a trend cycle vs. a consolidation phase. When a market is trending, there tends to be very little overlap

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