One of our options trainees recently asked me if I thought it was wise for him to model his trading style after my own personal trading approach. It was a legitimate and intelligent question and it deserved a thoughtful reply. I recently tweeted a great article by Charles Kirk, which is exactly on point to this question. In the article … Read More
Directional Indicators That are Not TOO Wrong
One of the great things about options trading is that you can make a directional bet, be wrong, and still make excellent money on a trade. As many of my closest relatives are fond to point out how wrong I am on so many life issues, it is a comfort to know that there is a way to trade options … Read More
Maximizing Profits: Legging Out of a Winning Options Spread
Nothing is more frustrating to an options spread trader than working a trade for 30-60 days, using all of your skills and knowledge to initiate, adjust and improvise to position the trade for a nice win and then, on the day you have decided to exit and pocket that profit, you run into execution problems. There is nothing quite like … Read More
Take your gifts when you get them
For butterfly traders like myself, there are scenarios that occur where a trade can appreciate very quickly. This can happen for several reasons. One of the very common causes of this phenomenon is when the trade is initiated in a high volatility environment and then the volatility is removed from the market rapidly. In other cases the market simply channels for the … Read More
What is your “bread and butter” options trade?
Yesterday we held our second Options Tribe webinar on the subject of an SPX butterfly trade that I was involved in developing. This trade has become my “bread and butter” trade –the approach that I am comfortable trading under almost all market conditions and which provides a stable pattern of returns. Almost every great options trader that I know has his … Read More
Expiration Week Pinning Trades
Here’s an e-mail I received from a good friend of mine and former mentoring student Options Tribe Member Craig. Craig is a fine option s trader and specializes in “expiration week trades”. These are highly specialized trades that Craig makes almost every month during options expiration week. Each expiration week , I ask Craig what he’s up to this month. … Read More
Traders Ask: What Do I Do About An Obnoxious Bid Ask Spread on a Butterfly Trade?
An Options Tribe Member asks: Given that we’re about 55 days out from the July monthly options expiration, I was playing with a July 770-820-870 put butterfly on the RUT (when it was trading around 840). Usually the bid/ask spread for ATM and OTM puts on the RUT is narrow enough, but the spread on the 870 put ($51.80 by … Read More
Traders Ask: Is it better to neutralize a double butterfly or simply close it?
Martin asks: I have a question about one of your first webinars involving the February butterfly. At the end of the trade it appears that instead of closing the trade completely you just neutralized it. What was the reason that you handled it that way ? What is the advantage of neutralizing the trade instead of closing it?: Martin is … Read More