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Saturday, December 29, 2012

Weekend Portfolio Analysis (12-29-2012)

SPX started the week at 1430.15 and closed at 1402.43 for a -1.94% loss. A new position for the January 2013 expiration cycle was entered on Friday when I sold a 134/132 SPY Bull Put spread. Essentially betting that SPY won't go below 134 before January 18.

Friday, December 28, 2012

Sunday, December 16, 2012

LT Trend Sniper Characteristics and Results

A sequel to the article LT Trend Sniper - A forex strategy that works, for my own future reference about the characteristics of the system.

Weekend Portfolio Analysis (12-16-2012)

SPX started the week at 1418.07 and closed at 1413.58 for a small loss of -0.32%. No position was entered this week as I wait for the market to reach an extreme level.

Friday, December 14, 2012

LT Trend Sniper - A forex strategy that works

For more detailed information feel free to download the LT Trend Sniper free documentation guide.

The LT Trend Sniper system is a Forex strategy that I designed and automated in 2012. It went through a live forward testing phase of two years (2013 & 2014) and it currently trades on a real money account.

The LT Trend Sniper is a simple system that operates based on one entry rule only and two exit rules. It is entirely based on price action and uses exactly zero indicators for its trading decisions. Its simplicity is what makes it robust and likely to keep delivering profits in the future as it exploits a very basic characteristic present in any market where trends are developed. It has successfully been tested in pairs such as: EURUSD, GBPUSD, AUDUSD and also GOLD (XAUUSD). Although the best results by far are obtained from the EURUSD.

Thursday, December 13, 2012

How to evaluate and choose a trading newsletter

I believe there's no substitute for being responsible for your own trading. Making your own decisions and not having anybody else to blame but yourself. But that's something that in order to truly understand, you probably need to spend some time in the markets, getting hurt here, fighting some battles there, getting some disappointments after some services didn't delivered what you thought they would, etc. You need to get some wounds, and learn from them as you lick them.

Sunday, December 9, 2012

Weekend Portfolio Analisis (12-09-2012)

I'm back into the game folks. After a month of pause in my trading, this past week, as you know I entered my first trade for the January 2013 expiration cycle. It was a RUT 870/875 Bear Call spread for 0.70 credit. The SPX index almost didn't move this week: from 1416.34 to 1418.07 and everybody seems to be scared of entering either long or short positions in fear of unpredicted outcomes out of the Fiscal Cliff talks.

Wednesday, December 5, 2012

January 2013 RUT Credit Call Spread

As per my tweet at 2:20pm, today I entered my first trade for 2013, with a RUT Bear Call Credit Spread in the January 2013 expiration cycle.

SELL 5 RUT 870 Jan. 2013 CALL (@3.30)
BUY 5 RUT 875 Jan. 2013 CALL (@2.60)

Friday, November 30, 2012

Design of a EURUSD Donchian breakout strategy with proven statistical edge

This article appeared first on The Lazy Trader at http://www.the-lazy-trader.com/2012/11/eurusd-donchian-breakout-strategy.html

This article is about a Forex strategy that I designed for the EURUSD currency pair. In this exercise I would like to share with fellow Forex traders the concepts and ideas to take into account in order to design a "likely" long term profitable trading system. Steps to follow in the design process, and methods to find the answers to questions such as "Is there statistical evidence to believe this system has a positive edge?" or "How do I choose a reliable parameter set?" or more important yet "How do I know in the future that the system has possibly stopped working and shouldn't be used anymore?"

Tuesday, November 27, 2012

A simple strategy that beats most traders

I often find myself thinking about possible strategies and end up playing with historical data whenever I have the time. I like to come up with some experiments or simply have some fun enjoying the exercise of trying to design trading systems for different portfolio sizes and risk tolerances. Needles to say it is a tough exercise and most of the time I end up frustrated, but that's not the point for this article.

Saturday, November 24, 2012

Measuring Portfolio's Performance

When browsing on the Internet for trading related content, we often stumble upon many websites that reflect some sort of historical performance, usually on a monthly basis. Sometimes we see impressive numbers that just look too good and we start doing the math in our head, calculating how much longer until we get rich with the returns achieved by those guys.

Tuesday, November 20, 2012

Trading with realistic expectations

A few days ago I had some emails back and forth with a reader talking about profit expectations when trading. Obviously I will protect his anonymity and I won't quote his exact words either so as not to make it personal. In the end, I believe it is valuable to share some thoughts with you folks, specially in this controversial topic as we can all benefit from a healthy discussion.

Saturday, November 17, 2012

Portfolio Performance Analysis

With the arrival of options expiration yesterday, I finished the trading activity for 2012. The last position of the November expiration cycle, the  RUT 750/740 Bull Put spread expired worthless on Friday morning for full profit of $255. With this result, both trades on the November expiration cycle were profitable. The SPY 137/135 yielding $180 and the RUT 750/740 yielding $255, for a total of $435. On an initial balance of $13311 this month in the portfolio, it represents a performance of +3.27% before considering commissions.

Sunday, November 11, 2012

Weekend Portfolio Analysis (11-11-2012)

The S&P500 started the week at 1414.02 and closed at 1379.85 on Friday for a -2.42% loss. And we finally left US elections behind. I had the opportunity to close the SPY 137/135 Credit Put Spread on Tuesday right before the sell off on Wednesday and this time I didn't hesitate, exiting for 0.14 debit. Could have exited for 0.11 debit but it is impossible to time exits perfectly all the time. Overall I'm glad that I closed the position for profit, and reduced my downside exposure right in front of the sell off that took place the following day.

Tuesday, November 6, 2012

November SPY Bull Put spread closed

The November SPY 137/135 Bull Put spread was closed today for 0.14 debit as follows:

BUY TO CLOSE 15 November SPY 137 PUT @0.31
SELL TO CLOSE 15 November SPY 135 PUT @0.17

Debit: 0.14 

Sunday, November 4, 2012

Weekend Portfolio Analysis (11-04-2012)

The S&P500 started the week at 1410.99 on Wednesday and closed at 1414.20 on Friday for a small 0.2% gain. We had a solid bullish bar on Thursday and a strong start on Friday after the better than expected jobs report. I had the opportunity to close my SPY 137/135 Bull Put Spread for a debit of 0.11, which was much better than my plan of 0.15 mentioned in my analysis last week. Why didn't I close it then? Simple: I was too greedy. In the twelfth month of trading this system, trade by trade publicly disclosed on this website, I have realized that I'm usually more greedy than fearful. I could have closed the trade for 0.11 debit, I had time to do it for .12, .13, .14, .15 I had like two hours to close the spread for those prices and I didn't, only wanting and convinced that I could get a better exit.

Sunday, October 28, 2012

Weekend Portfolio Analysis (2012-10-28)

The S&P500 started the week at 1433.21 and closed at 1403.28 for a loss of -2.09%. Pretty much in line with my analysis last weekend. I took advantage of the weakness on Tuesday and  opened a Bull put spread with RUT 750/745 using November options.

Tuesday, October 23, 2012

November RUT Bull Put Spread

As per my tweet today at 10:53 am.

SELL 3 RUT November 750 Put (@3.80)
BUY 3 RUT November 740 Put (@2.95)

Sunday, October 21, 2012

Weekend Portfolio Analysis (10-21-2012)

Options expiration was on Friday and along with it the October cycle in the portfolio was closed with the RUT 910/915 Bear Call spread expiring for full profit of 16.28% return on margin. The October expiration cycle closed with only two trades, a $454 return before commissions, $334 after commissions which represents +2.57% growth on a total portfolio of $12977. You can check out all the details here. Overall, 11 months of trading activity have yielded 26 winners, 5 losers and a +33.11% performance after commissions.


Monday, October 15, 2012

Position Size Calculator for Metatrader

In this post I will talk about position size calculations in Forex, the importance of keeping a stable risk management (via position sizing) and the Position Size Calculator I designed for the Metatrader platform in order to make position size calculations easier for Forex traders.

(Click on Image to enlarge)

Saturday, October 13, 2012

Weekend Portfolio Analysis (10-13-2012)

We saw mostly weakness this week with the S&P500 going from 1460.93 to a close on Friday at 1428.59, for a total loss of  2.21%. A new position was traded this week, but first let's talk about the October expiration cycle which comes to an end on Friday the 19th, that's 6 days from today.

Wednesday, October 10, 2012

November SPY Bull Put Spread

As per my tweet today a  few minutes before market close.

SELL 15 SPY November 137 Put (@0.97)
BUY 15 SPY November 135 Put (@0.71)

Sunday, October 7, 2012

Multiple Trades Manager Expert Advisor (EA) for Metatrader

The Trade Manager EA is a very useful expert for MT4 that monitors several Forex trades of your choice, allowing you to walk away from your computer knowing that your positions are being taken care of according to parameters you specify. The expert can monitor trades that were entered manually and trades that are generated by other Expert Advisors.

Trade Manager is able to perform the following 4 tasks for you:

Weekend Portfolio Analysis (10-07-2012)

The SP500 started the week at 1440.90 and closed at 1460.93 on Friday. A gain of 1.39% for the week. Supposedly 114000 new jobs were created and the unemployment rate went down to 7.8%, first time below 8% in almost four years. Of course this figure is to be taken lightly as revisions might ensue as it has happened in the past. But anyways, the market kept slowly inching higher.

Sunday, September 30, 2012

Weekend Portfolio Analysis (09-30-2012)

The SP500 started the week at 1459.76 and closed at 1440.67 on Friday. A loss of -1.31% for the week. That's pretty much in line with my expectations on last weekend portfolio analysis of a move smaller than 2%. We were reminded how weak current conditions are with a terrible 1.3% GDP vs 1.7% expected and an awful Chicago PMI of 49.7 vs 52.8. The markets, however, didn't tank.

Tuesday, September 25, 2012

CCI Divergence Indicator for Metatrader

The CCI Divergence indicator displays the traditional CCI indicator panel with the addition of both Regular and Hidden divergences that are also reflected on the price action screen. The indicator sends alerts via email (with attached screenshot of the chart), via mobile notification to your mobile device (Android, iPhone, iPad), and additionally pop up message and/or sound alerts in the Metatrader platform. That’s four different ways to alert the user. The period of the CCI indicator as well as the colors can be customized.

DeMarker Divergence Indicator for Metatrader

The DeMarker Divergence indicator displays the traditional DeMarker indicator panel with the addition of both Regular and Hidden divergences that are also reflected on the price action screen.  The indicator sends alerts via email (with attached screenshot of the chart), via mobile notification to your mobile device (Android, iPhone, iPad), and additionally pop up message and/or sound alerts in the Metatrader platform. That’s four different ways to alert the user. The period of the DeMarker indicator as well as the colors can be customized.

Momentum Divergence Indicator for Metatrader

The Momentum Divergence indicator displays the traditional Momentum indicator panel with the addition of both Regular and Hidden divergences that are also reflected on the price action chart. The indicator sends alerts via email (with attached screenshot of the chart), via mobile notification to your mobile device (Android, iPhone, iPad), and additionally pop up message and/or sound alerts in the Metatrader platform. That’s four different ways to alert the user. The period of the Momentum Indicator as well as the colors can be customized.

OsMA Divergence Indicator for Metatrader

The OsMA Divergence indicator displays the traditional OsMA indicator panel with the addition of both Regular and Hidden divergences that are also reflected on the price action screen. The indicator sends alerts via email (with attached screenshot of the chart), via mobile notification to your mobile device (Android, iPhone, iPad), and additionally pop up message and/or sound alerts in the Metatrader platform. That’s four different ways to alert the user. The period of the OsMA as well as the colors can be customized.

Moving Average Crossover indicator for Metatrader

The Moving Average Cross Over is a highly customizable indicator that displays the cross of two moving averages of your choice. The indicator sends alerts via email (with attached screenshot of the chart), via mobile notification to your mobile device (Android, iPhone, iPad), and additionally pop up message and/or sound alerts in the Metatrader platform. That’s four different ways to alert the user. The periods of the moving averages can be customized, as well as the method (Simple, Exponential, Smoothed, Weighted), the applied price (Close, Open, High or Low) and the colors.

Monday, September 24, 2012

October $SPY Bear Call Spread closed

Demo-Trading:
BUY TO CLOSE 17 October SPY 149 CALL @0.38
SELL TO CLOSE 17 October SPY 151 CALL @0.14

Debit: 0.24 

Saturday, September 22, 2012

Friday, September 21, 2012

A study on the commissions schemas offered by the most popular Canadian online discount Bokers

For  options traders, specially those who trade multi-legged positions (spreads, condors, butterflies etc), commissions are one important consideration when choosing a broker. With the increase of online retail trading in the last few years, commissions have decreased a lot, specially in the US, with its huge population, high levels of trading activity and obviously a wide selection of brokers competing.

In today's post I want to analyze the commissions schemas of brokers who operate in Canada. I will only look at commissions applied to options trading activity and how they affect traders on this side of the border. This is not a post to discuss who has the best trading platform, or the best customer service. It is just a starting point to quickly rule out some brokers, if you are an options trader who focuses on multi-legged positions or monthly income trades (Credit spreads, Iron Condors, Calendars, Diagonals, Butterflies etc)

Tuesday, September 18, 2012

OptionsTradingIQ promotion

Hey Folks just a quick note. My good friend and better blogger and trader OptionsTradingIQ, who has been a contributor to this blog in the past in the past, has this little nice promotion that you can take advantage of right now.
Go to OptionsTradingIQ's promotion now, and enjoy!

Saturday, September 15, 2012

Weekend Portfolio Analysis (09-15-2012)

The S&P500 grew 27.85 points this week. That is 1.94% in positive territory and there was plenty of activity in the portfolio including the first two trades of the October cycle.

Friday, September 14, 2012

October $RUT Bear Call Spread

Demo-trading:
SELL 6 RUT October 910 Call (@3.10)
BUY 6 RUT October 915 Call (@2.40)

Thursday, September 13, 2012

RSI Divergence Indicator for Metatrader


After building the MACD Divergence Indicator and the Stochastics Divergence Indicator, the RSI indicator was next in the queue. I also wanted to keep the same flexibility letting the user customize everything and I wanted it to be able to send you emails with screen shots attached, and even notifications to your mobile device if you wanted.

Stochastics Divergence Indicator for Metatrader


After being disappointed by all Stochastics Divergence indicators out there, I decided to implement my own and make it as flexible and customizable as possible. I also wanted it to be able to send you emails with screen shots attached, and even notifications to your mobile device if you wanted.

September RUT Bear Call Spread closed

Demo-Trading:
BUY TO CLOSE 6 September RUT 860 CALL @8.00
SELL TO CLOSE 6 September RUT 865 CALL @5.50

Debit: 2.50 

Wednesday, September 12, 2012

October SPY Credit Call Spread

Demo-trading:
SELL 17 SPY October 149 Call (@0.48)
BUY 17 SPY October 151 Call (@0.22)

Tuesday, September 11, 2012

An expectancy analysis of Regular MACD Divergences for the EURUSD currency pair

This article is a study about the effectiveness of trading Classical MACD Divergences on the EURUSD currency pair. My goal is to evaluate whether Classical MACD Divergences offer and edge and to somehow quantify the edge of the indicator that could lead to the development of likely long term profitable automated strategies.

Saturday, September 8, 2012

Weekend Portfolio Analysis (09-08-2012)

And Up we went! After two weeks of sideways action, Thursday delivered a solid elephant up bar and the S&P500 grew 2.4% this week. Then on Friday, the market was also able to shake off a poor Employment Report and remain in green territory.

Friday, September 7, 2012

How much capital do you need to trade for a living?

It is a good question, and one we probably never asked ourselves in the very early stages of our trading careers. How much capital do I need to trade for a living?

Tuesday, September 4, 2012

September SPY Bear Call Closed


Demo-Trading:
BUY TO CLOSE 16 September SPY 145 CALL @0.25
SELL TO CLOSE 16 September SPY 147 CALL @0.08

Debit: 0.17 

September RUT Bull Put Spread Closed

Demo-Trading:
BUY TO CLOSE 6 September RUT 780 PUT @4.90
SELL TO CLOSE 6 September RUT 775 PUT @4.20

Debit: 0.70 

Sunday, September 2, 2012

Useful resources for an Income Trading System based on selling Options

In order to successfully trade Out of the Money Credit Spreads for income, you don't really need the ultimate information that nobody has, nor the last minute headline before anybody else does. In fact you don't need to be looking at the markets every second and you don't really need real live data, other than the one supplied by your trading platform. In this article I want to share a list of websites and tools I use in order to generate ideas and stay in sync with the markets at the lowest possible monetary cost. In fact at no cost at all.

Saturday, September 1, 2012

Weekend Portfolio Analysis (09-01-2012)

Again, another week of mostly sideways action, with SPX opening the week at 1411.13 and closing yesterday at 1406.58, for a -0.3% performance. The low volumes persist with usual days between 60 million and 100 million shares on SPY, although we saw a little spike to 151 million shares on Friday, still far from the more common 200 million shares per day, but maybe a sign that normal activity will resume from Tuesday on.

Saturday, August 25, 2012

Weekend Portfolio Analysis (08-25-2012)

Finally we had a little more fun this week. With more movement, and some conviction on that pull back from SPX 1426 to 1398 Tuesday through Friday, and then some recovery to end up the week with a -0.4% performance for the S&P500. So, not the end of the world, and apparently a scenario that still favors neutral traders.

Tuesday, August 21, 2012

September RUT Bull Put Spread

Demo-trading:
SELL 6 RUT September 780 Put (@4.60)
BUY 6 RUT September 775 Put (@4.00)

September RUT Bear Call Spread

Demo-trading:
SELL 6 RUT September 860 Call (@2.30)
BUY 6 RUT September 865 Call (@1.65)

Sunday, August 19, 2012

How to measure a system's edge


Many traders and authors out there constantly say things like "You need a system with positive edge", "You need to trade with odds on your side". But very few people make a more serious effort at going deeper. What does it mean to have a positive edge? and more importantly how do we measure and mathematically demonstrate that a given strategy has a positive edge?

Saturday, August 18, 2012

Weekend Portfolio Analisys (08-18-2012)

Once again we had a stubborn market this week. Still low volumes and a market able to apparently shake off bad news, or not so good releases. On Thursday, SPY moved up to finally break the tight range 139 - 141.40 where it had been trading for the last few days.

Sunday, August 12, 2012

Weekend Portfolio Analysis (08-12-2012)

Boring week in the markets with slow movements and light volume being the central topic. The week resulted in 5 consecutive little green days that moved the S&P500 by +1%. Now, let's analyze the positions in the portfolio.

Sunday, August 5, 2012

Weekend Portfolio Analysis (08-05-2012)

It was mostly a bearish week until Friday came with that huge reversal candle. Overall The S&P500 gained around 0.5%. Now with the busiest week of the month in terms of news behind, and earnings season winding down this might very well be a boring month ahead of us. Summer markets tend to be a little boring at times lacking conviction and volume, so you have to be very careful with your trade set ups and your position sizes.

Wednesday, August 1, 2012

How to lock in profits on an options trade and stay in the position

How to lock in profits on an options trade and stay in the position

Many times you have a winning position on an option trade, and you would like to lock in some profit but stay somehow in the game because you feel there is potential for more. You know there is potential for more but you have that internal fear of losing the gains you have up until now.

Tuesday, July 31, 2012

September SPY Bear Call Spread

Demo-trading:
SELL 16 SPY September 145 Call (@0.70)
BUY 16 SPY September 147 Call (@0.38)

Saturday, July 28, 2012

Weekend Portfolio Analysis (07-28-2012)

A very interesting week in the US markets where most traders, newsletters, information sources etc seemed to be bearish and the market, as usual, did contrary to what was mostly expected. The week started in a low note following the negative session last Friday. That plus all the pessimism in the world economy right now and the comparison with last year's summer that most traders seemed to be making had most specialists looking at the Bear side. Then Thursday and Friday came really strong fooling more than one out there and the S&P500 ended the week with a +1.8% performance.

Wednesday, July 25, 2012

Portfolio Beta Weighted

During my usual Weekend Portfolio Analysis articles you have probably seen me doing a Portfolio analysis where all the positions in the portfolio are combined in a single profit picture. This is done by using the Beta Weighting feature of the ThinkOrSwim platform. Today I want to talk a little bit more about what Beta and Beta weighted portfolio mean, and why it is advantageous to do this type of analysis.

Tuesday, July 24, 2012

August RUT Credit Put Spread

Demo-trading:
SELL 3 RUT August 700 Put (@3.60)
BUY 3 RUT August 690 Put (@2.75)

Monday, July 23, 2012

Weekend Portfolio Analysis (07-23-2012)

Back from a much needed relaxation time with the family in the US. The two positions on the July portfolio expired worthless last week for full profit.

Thursday, July 12, 2012

Down to the US for a week

Folks, I'm flying to the US tomorrow and will be off the entire next week. That being said there won't be a "Weekend Portfolio Analysis" article this weekend. I'll be back on Canadian soil on Sunday 22. But, before leaving, just a quick wrap up on how the portfolio is doing, and plans moving forward with the already open trades.

Sunday, July 8, 2012

Weekend Portfolio Analysis (07-08-2012)

The first position of the August portfolio was opened on Tuesday. A RUT 860/870 Bear Call spread, based on the fact that markets tend to be slow during summers, and specially bearish on August historically speaking. Plus the fact that in order for this position to be a loser RUT would have to break the High of the year at 847.92 by a good margin.

Tuesday, July 3, 2012

August RUT Credit Call Spread

Demo-trading:
SELL 3 RUT August 860 Call (@3.20)
BUY 3 RUT August 870 Call (@2.00)

Sunday, July 1, 2012

Weekend Portfolio Analysis (07-01-2012)

What a busy Sunday here in Toronto! We have the Canada Day celebrations, Gay Pride, and on top of that the final of the Eurocope 2012. What am I even doing blogging?

Saturday, June 23, 2012

Weekend Portfolio Analysis (06-23-2012)

We are finally past the Greek elections. And as anticipated by many, the markets moved up on Monday and Tuesday (although not as hard as many thought). We got to hit SPX 1360 and according to last weekend's article the market would reach overbought level at that point and I would try to sell calls on RUT.

Sunday, June 17, 2012

Weekend Portfolio Analysis (06-17-2012)

The S&P500 closed the week with a 0.7% increase. Pretty much sideways action until Thursday and Friday where bullish momentum was more obvious. The June portfolio saw its two remaining positions expire worthless for full profit. The SPY 137/139 Credit Call Spread was not touched at all as price never threatened the 137 level so no need to adjust or anything here for a 17.65% return on margin. The IWM 72/70 Credit Put Spread was also successful, and since IWM never hit 72.20, I didn't have to adjust/roll or anything. Full profit was obtained here of 16.28% return on margin.

Friday, June 15, 2012

July SPX Bear Call spread

Demo-trading:
SELL 6 SPX July 1415 Call (@3.30)
BUY 6 SPX July 1420 Call (@2.40)

Sunday, June 10, 2012

Weekend Porftolio Analysis (06-10-2012)

In spite of everybody having a bearish outlook last week, the markets managed to close one of the best weeks of the year with the S&P500 moving up by 3.8%. Like I've said before, I strongly believe the markets tend to be sort of random or at least highly unpredictable in the very short term, and days like the recent ones convince me more and more. Now, in the very long term it starts to make sense when you take up charts of many years, and analyze bear markets and their coincidence with periods of economic crisis and all that. But, in the very short term, it is really tough to guess where the market will move tomorrow, or the day after. Specially when it may react positively to apparently bad news and vice versa.

Saturday, June 9, 2012

Two ways to protect Iron Condors from a Flash Crash

Today's article is a guest post by Gavin from Options Trading IQ. Gavin's strategy is focused on income portfolios, where he trades Credit Spreads, Iron Condors, Calendar Spreads, Butterflies and Covered Calls. Always trying to keep his profit curve as smooth as possible with the extensive risk management he applies. Check out his website!

Monday, June 4, 2012

July SPY Bull Put Spread

Demo-trading:
SELL 15 SPY July 118 Put (@1.73)
BUY 15 SPY July 116 Put (@1.41)

Sunday, June 3, 2012

Weekend Portfolio Analysis (06-03-2012)

Well, May 2012 is in the past now. This week I decided to close the June 125/127 Bull Put Spread in what was a good decision, given that the markets sold off strong after that closing the week with a -3.1% loss for the S&P 500. I held on to the plan outlined on Sunday and got good results.

Tuesday, May 29, 2012

June SPY Credit Put Spread closed

Demo-Trading:
BUY TO CLOSE 14 June SPY 127 PUT @0.68
SELL TO CLOSE 14 June SPY 125 PUT @0.47

Debit: 0.21 

Sunday, May 27, 2012

Weekend Portfolio Analysis (05-27-2012)

We saw a very quiet week in spite of all the fears, and the S&P500 moved up 1.9%. A new Bear Call Spread was open on SPY (137/139 strikes) in order to mitigate some of the downside risk on the portfolio. And essentially the markets are now in no man's land.

Wednesday, May 23, 2012

June SPY Bear Call Spread

Demo-trading:
SELL 14 SPY June 137 Call (@0.50)
BUY 14 SPY June 139 Call (@0.20)

Sunday, May 20, 2012

Weekend Portfolio Analysis (05-20-2012)

What a week! S&P500 down -4.4% to what has probably been the worst performance by the market this year. The downside pressure continues and the pattern totally mutated in respect with the previous week.

Thursday, May 17, 2012

June SPY spread adjusted

An adjustment had to be made this afternoon on the SPY 131/129 Credit put spread for a loss. Again, being extremely busy at the office prevented me from blogging in real time. The spread was rolled over to the 127/125 strikes seeing that the markets are at extreme oversold levels and a pull back is due any time in spite of the fact that the world seems to be falling apart.

Sunday, May 13, 2012

Weekend Portfolio Analysis (05-13-2012)

SPX had a loss of -0.9% this week. And it looks like a potential downtrend channel might be forming....

Wednesday, May 9, 2012

June IWM Bull Put Spread

I opened a trade before 10am today during the morning sell off but didn't have the time to blog about it. Here it goes:
Demo-trading:
SELL 14 IWM June 72 Put (@0.80)
BUY 14 IWM June 70 Put (@0.52)

Saturday, May 5, 2012

Weekend Portfolio Analysis (05-05-2012)

Ok, so back in Canadian soil this week, and with my first trade after over a month of inactivity. The S&P500 lost 2.6% this week and Thursday and Friday saw the formation of two solid red candles, specially Friday.

Friday, May 4, 2012

June SPY Bull Put Spread

Demo-trading:
SELL 14 SPY June 131 Put (@1.28)
BUY 14 SPY June 129 Put (@0.98)

Monday, April 9, 2012

The Three Legged Box explained

Morning folks! Take a look at my recent article about The Three Legged Box technique at Options Trading IQ. This is my first collaboration with another web site and I am pleased to start with Gavin, who has been trading the markets for 8 years and is focused on trading options in a similar way to the style we have followed on our site for the last months. Enjoy!

Wednesday, April 4, 2012

Taking a tropical break

I will soon be traveling to my mother land: Cuba ladies and gentlemen!


The trip is planed for the second half of April and consequently I will stop entering trades in order to leave 100% in cash as I will have very limited internet connectivity there.

The May portfolio, therefore won't reflect any position and trading will continue using June positions when I'm back in May.


Locking profits with the Box Spread

The Box Spread is a strategy where two vertical spreads (one using calls and one using puts) with opposite bias are entered in the same strike prices.

For example, On March the 9, you could have bought an SPY April 138/140 Bull Call Spread  for 0.94 debit. And at the same time the 140/138 Bear Put Spread for a debit of 1.06.

Tuesday, March 27, 2012

Repair a Call Option by Rolling to a Debit Call Spread

Many times you buy a long call and the underlying stock moves lower. The stock now needs to move up even more than initially and has less time to do so. Your position starts losing money and you can basically exit for a loss, or stay in the trade hoping for the best. Another alternative is to lower your breakeven point if you think there are good chances for the stock to go up. This can be done by getting out of your current position and entering a Bull Call Spread.

Sunday, March 25, 2012

Weekend Portfolio Analysis (03-25-2012)

It was a predominantly bearish week, but showing strength during the US session. Weakness overnight in Europe that was reversed later during the US session. That's how in spite of having 4 bull daily candles out of 5, the S&P500 lost -0.3% this week according to Finviz.

Thursday, March 22, 2012

April SPY Spread closed

Demo-Trading:

BUY TO CLOSE 14 April SPY 145 CALL @0.24
SELL TO CLOSE 14 April SPY 147 CALL @0.08
Debit: 0.16

Tuesday, March 20, 2012

Locking profits on a Vertical Spread

Let's say you trade a vertical spread on XYZ instrument. XYZ is trading at 100 and you place a Bull bet, you buy a 105 Call for 0.75 and sell a 107 Call for 0.50. All that for a net debit of 0.25 and a max return of 1.75 (2 point wide spread - 0.25 risk = 1.75 max reward)

Sunday, March 18, 2012

Weekend Portfolio Analysis (03-18-2012)

As expected in last weekend's analysis the markets moved up during the week (plus 2%). The SPY 141/143 Bear Call spread had to be closed on Tuesday (I don't feel bad for that) although I could have closed it for full profit on Friday. March expiration cycle was a tough one where out of the four trades played, only one could be taken to expiration for full profit.

Wednesday, March 14, 2012

April SPY Bear Credit Spread

Demo-trading:
SELL 14 SPY April 145 Call (@0.49)
BUY 14 SPY April 147 Call (@0.23)

March SPY Spread Closed

Demo-Trading:

BUY TO CLOSE 14 March SPY 141 CALL @0.21
SELL TO CLOSE 14 March SPY 143 CALL @0.03
Debit: 0.18

Tuesday, March 13, 2012

Tips for reviewing Expert Advisors

Yes, we all know the vast majority of them are scams, or don't work in the end. However, successful automated trading is indeed possible with the right proven methods, that use sound trading principles and are backed up by serious statistical studies. One of the most common examples is that of the Turtles of Richard Dennis. Plus, most trading volume nowadays is done by algorithmic trading (I don't have the sources for specific numbers but I've read anywhere from 60 to 80% on the daily volumes on the NYSE).

Saturday, March 10, 2012

Weekend Portfolio Analysis (03-10-2012)

Finally some fun! A week with a 2% down day. It had been a while since the last one of those. Funny how headlines all over the internet were talking like it was the end of the universe. After that Tuesday, the market resumed its uptrend, and closed the week with no major damages. S&P500 only lost 0.1% overall this week and now indicators are showing we are far from overbought. I think an assault to resistance at 1380 is very likely this week.

Wednesday, March 7, 2012

March IWM Bull Put Spread closed

Demo-Trading:

BUY TO CLOSE 14 March IWM 76 PUT @0.33
SELL TO CLOSE 14 March IWM 74 PUT @0.16
Debit: 0.17

How to adjust or roll a Credit Spread

XYZ is trading at $100, 30 days to expiration. You play a Credit Call Spread selling the 110 Call and buying the 115 Call for protection. The goal is for XYZ to not hit $110 by expiration. Let's assume that a credit of $2.00 is obtained (that is $200 per contract per leg played).

10 days later XYZ is trading at $109, certainly threatening your position and you have a temporary loss of $100. With 20 days to expiration it seems very likely that XYZ can advance one more point to the upside. At this point you can close your trade for a small loss. You can also hope for the best and wait for XYZ to reverse (hope is never the best decision), or you can adjust your position.

Tuesday, March 6, 2012

April IWM Bull Put Spread

Demo-trading:
SELL 14 IWM April 72 Put (@0.95)
BUY 14 IWM April 70 Put (@0.67)

Saturday, March 3, 2012

Weekend Portfolio Analysis (03-03-2012)

Things are getting clearer for the March expiration portfolio as only two weeks remain. The market was a little weird this week as we saw the SP500 advance +0.4%, Dow Jones +0.1% however the Russell 2000 index went down -3.0% in the week. This makes me a little concerned about my positions in the IWM etf (which tracks the Russell). Let's go one by one:

Wednesday, February 29, 2012

Risk/Reward, Profit Factor and Profitability of Trading Strategies

It is amazing how many traders, specially newbie traders, emphasize how this or that system wins 80% or 90% of the time, as if that is the only thing that matters. When in fact, only the combination of the success rate plus the risk/reward ratio of the trades should be analyzed as a whole.

Saturday, February 25, 2012

Weekend Portfolio Analysis (02-25-2012)

Well, well, well, and we keep going up and up and up. Anyone would say the sky is the limit for this market. Before my usual weekend rant, I want to talk about the title of these weekend articles which I have changed to "Weekend Portfolio Analysis". The reason why I think this change is important is that it accurately describes the purpose of these articles. I was definitely not forecasting market direction for the upcoming week, so a title like "Weekend Market Analysis" was not appropriate. At the same time the other title "Weekend Thoughts" was too generic, and I was attracting the wrong readership to the site, by bringing frustrated moms who were Googling God knows what on a Sunday afternoon and were ending up at my site.

Tuesday, February 21, 2012

Why ZuluTrade is a bad idea

If you got to this post via a search engine, you know what ZuluTrade is. If you don't, ZuluTrade is a website that offers a platform for Forex signal providers to broadcast their trading signals so that these are replicated across subscribers' accounts.

Saturday, February 18, 2012

Weekend Market Analysis (02-18-2012)

This was a very active week, with the markets still moving up with no significant retracement and holding the 10EMA with confidence. Friday marked February expiration, and therefore, the trades for the month of February are now history and the track record updated accordingly.

Thursday, February 16, 2012

February SPY Position closed

Demo-Trading:

BUY TO CLOSE 13 February SPY 137 CALL @0.08
SELL TO CLOSE 13 February SPY 139 CALL @0.00
Debit: 0.08

March SPY Bear Call Spread

Demo-trading:
SELL 14 SPY March 141 Call (@0.39)
BUY 14 SPY March 143 Call (@0.16)

Tuesday, February 14, 2012

Profitting from Delta Neutral trading

How to trade delta neutral and still profit from it?
At first I didn't even know what the hell Delta meant, let alone did I question how to make a profit Delta neutral trading. Anyways, according to Investopedia:

Friday, February 10, 2012

March SPY position closed

Demo-Trading:

BUY TO CLOSE 14 March SPY 139 CALL @0.75
SELL TO CLOSE 14 March SPY 141 CALL @0.39
Debit: 0.36

Thursday, February 9, 2012

March IWM Credit Put Spread

Demo-trading:
SELL 14 IWM March 76 Put (@0.76)
BUY 14 IWM March 74 Put (@0.51)

Wednesday, February 8, 2012

MACD Divergence indicator for Metatrader

The MACD Divergence indicator displays the traditional MACD histogram indicator panel with the addition of both Regular and Hidden divergences that are also reflected on the price action screen. The indicator sends alerts via email (with attached screenshot of the chart), via mobile notification to your mobile device (Android, iPhone, iPad), and additionally pop up message and/or sound alerts in the Metatrader platform. That’s four different ways to alert the user. The periods of the MACD as well as the colors can be customized.

Sunday, February 5, 2012

Weekend market analysis (02-05-2012)

Well, well, well, the market just doesn't want to go down. This week was impressive and gravity on the charts seems lost forever. This uptrend has been developing without pullbacks, and again, it reminds me so much of the December 2010 - February 2011 rally without pullbacks. It will happen, the pullbacks will come, they have to, in order to sustain this uptrend,.....well if the pullback doesn't show up the market will end up the year up 70% or something, which is clearly insane.

Friday, February 3, 2012

March IWM Credit Call Spread

Demo-trading:
SELL 14 IWM March 88 Call (@0.44)
BUY 14 IWM March 90 Call (@0.19)

March SPY Bear Call Spread

Demo-trading:
SELL 14 SPY March 139 Call (@0.63)
BUY 14 SPY March 141 Call (@0.31)

Wednesday, February 1, 2012

Use a Credit Spread or a Debit Spread

This is an interesting occurrence that you might not know of when/if you are new to trading vertical spreads and that you can use to your advantage to gain a few extra dollars here and there.

In my paper-trading venture I had decided to only trade Out of the Money Credit spreads. That is, when I believe the markets are close to overbought I sell and Out of the Money Call option and buy a farther Out of the Money Call option to reduce the unlimited risk. Likewise, when the markets seem oversold to me, I sell an Out of the Money Put option combined with the purchase of a farther Out of the Money Put for protection.

Sunday, January 29, 2012

Weekend Thougths (01-29-2012)

Overall a narrow trading range for the past week. With the usual strength from 3:30pm to 4pm to recover the losses of the day. Except for Friday when it closed weaker than normal.

Wednesday, January 25, 2012

Another SPY Credit Put Spread

Demo-trading:
SELL 13 SPY February 137 Call (@0.32)
BUY 13 SPY February 139 Call (@0.13)

Analysis of currency pairs in groups

This is one of the very few things that consistently worked when I was trading Forex during 2010. The Analysis of currencies in groups also known as Parallel and Inverse analysis of currency pairs is the technique that analyses a currency's strength or weakness based on the behavior of the pairs where that specific currency is involved.

Didn't get it? No problem, let's go with examples.

Tuesday, January 24, 2012

February SPY Bear Call Spread - Trade Closed

Demo-Trading:

BUY TO CLOSE 13 February SPY 135 CALL @0.50
SELL TO CLOSE 13 February SPY 137 CALL @0.20
Debit: 0.30

Monday, January 23, 2012

February RUT Bear Put Spread - Trade Closed

Demo-Trading:

BUY TO CLOSE 5 February 830 PUT @44.50
SELL TO CLOSE 5 February 835 PUT @49.30
Credit Received: 4.80

Saturday, January 21, 2012

Weekend Thoughts (01-21-2012)

Well, well, well, the markets just don't want to go down. This is so similar to late 2010 - early 2011 when no matter what you threw at it, it would shake it all off, and would keep moving up. The funny thing is, the more it moves up, the more people are convinced and turn bull. Former bears recognize being wrong, change their mood and jump on the bullish bandwagon, when in fact the higher the chances of a top being close. Once the number of bulls becomes extreme, the markets pull back. But before analyzing current conditions, I want to give myself a pat on the shoulder for the successful January expiration cycle...

Friday, January 20, 2012

February RUT Bear Put Spread

Demo-trading:
SELL 5 RUT February 830 Put (@50.60)
BUY 5 RUT February 835 Put (@54.80)

Wednesday, January 18, 2012

How to adjust a Double Calendar Spread

This is something I was looking for on Google and was not that easy to find. So, I'll give it a shot myself with the little I know. If you landed on this page via a Search engine then you probably know what a Double Calendar is. If you don't, then read this.

What often happens with this kind of positions is that the market never stays in the same place and may threaten to reach one of your breakeven points. Let's analyze for example a hypothetical position on XYZ.

Sunday, January 15, 2012

Weekend Thoughts (01-15-2012)

What a boring week! Thank God I'm not a day trader (yet). Lack of volume, lack of conviction to either side and in the end the S&P500 only advanced 0.88% overall. I took advantage of some upside moves that increased Calls premiums early in the week and opened an Out of the Money Call Credit Spread on SPY, essentially placing my bet that SPY won't hit 135 by next month which is roughly similar to saying SPX wont hit 1350.

Tuesday, January 10, 2012

Amazing Crossover System. Expert Advisor

This Forex System was initially introduced by ForexPhanton who discussed in one of babypips' forums, and later on, it was selected by the community of babypips.com as the System of the month for the month of October 2011.

February SPY Bear Call Spread

Demo-trading:
SELL 13 SPY February 135 Call (@0.67)
BUY 13 SPY February 137 Call (@0.32)

Saturday, January 7, 2012

Weekend Thoughts (01-07-2012)

It was a terrible week for me as I couldn't get my drug so frequently to satisfy my addiction (the stock market). Turns out I had to go to London, Ontario for work and I spent the week in meetings and sitting at a desk with no privacy at all!! And it really sucks when you can't take a peek at the markets from time to time. Every 15 minutes I was pretending someone was texting me or something so I turned on the phone and looked at how the major indexes were doing without anybody noticing. Man it really sucks to be trapped in the 9 to 5pm working stiff! Other than that London was great, the crew over there was awesome (never seen people drinking more than those guys. These Canadians are insane) and the projects we are working on are pretty interesting too, so it was not that bad after all. I love this awesome nation!

Now, the markets...

Tuesday, January 3, 2012

BookingAlpha & OptionAlpha. A breath of fresh air.

Update June 1, 2013: The original article was written in January 2012. 18 months later I don't recommend BookingAlpha's service anymore. I still praise them for their transparency but some risk mismanagement has led them to very poor results almost from the very moment this review was initially written.

Today I want to talk about two newsletters that offer alerts and education to trade options in the US markets: BookingAlpha and OptionAlpha. I have been a subscriber of both newsletters for a while now, keeping them both in order to get their insights and learn from them as much as possible.

Sunday, January 1, 2012

Weekend Thoughts (01-01-2012)

Well, well, well....the year is finally over... thank God!! I'm sick of the carols everywhere and the cheesy year end commercials. Now down to business! As usual, here is a chart of the S&P500.