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Monday, November 22, 2010

Closing Calendars trades (OSX)

Today at about 4pm, the calendars on OSX discussed here were closed.

This trade was put on November 16, and closed today only 6 days later. Remember how I wanted to benefit from the volatility skews, by selling options of high volatility while buying options of low volatility for protection.

Saturday, November 20, 2010

Using options volatility

Following the idea of Volatility. I am going to be experimenting with a position in the PHLX OIL SECTOR index (OSX). Which I didn't find the time to blog about when first opened.

The idea is to use calendars, trying to sell the high volatility in the front month and buy the lower volatility in the farther month for protection.

Closing Butterfly on SPY

Following up on the Butterfly play discussed here. This trade was unfortunately a loser. SPY ended the week outside our profit range so we lost $154.

As you can see in the chart,

What is options volatility?

I remember having a hard time understanding when someone spoke about volatility. I didn't want just a concept in my mind, I wanted to have a formula, something mathematical so I could feel fine with my soul.

Now, what is then volatility?

Friday, November 19, 2010

Find the right Forex broker

This is a follow up on my venture trying to find a good Forex broker. My initial post can be found here.

Out of my already filtered list:

- Alpari
- ATC Brokers
- Oanda
- MB Trading

I am reducing it even more ...

Wednesday, November 17, 2010

How to find a good Forex broker

For sure, one way not to find it is by basing your judgment only on online reviews. I have been spending hours of precious time during the last two weeks trying to find a good Forex broker.

At first I thought it would be something easy. Boy was I wrong! By now I have probably been through every website with Forex brokers reviews you have read out there. And it's really disappointing to see so much crap and scum everywhere. Most sites offer fake reviews, most sites get paid in order to raise the rating of specific Brokers with fake reviews. Furthermore there is no guarantee that the reviews are legit and not written by the brokers themselves. In the end Internet is so impersonal! So, by default I don't believe in anything. Lies everywhere....

Monday, November 15, 2010

Follow Up on Butterfly trade on SPY

This is a follow up on the Butterfly trade played on the SPY ETF. The initial trade was discussed here.

Well, the markets have gone down a little since the trade was open and along with it, as usual, most indexes and ETFs that track them. That is the case for the SPY which has gone down to 120.03 from 122.73 on November 9. Since our initial profit range had been defined from 122.54 to 127.47 we are in a losing position right now.

Take a look at the profit chart obtained from the ThinkOrSwim platform:

Sunday, November 14, 2010

Protecting investments with a Collar

The collar is another wonderful strategy that combines stocks with options to protect investments and make some profit at times as well.

Suppose you have 100 shares of company ABC. Each share is worth $10, so you have a $1000 investment. Now, you are afraid to lose money on that stock and you buy a PUT option strike price $10 for say $2.00 ($200 for the right over 100 shares).


Ok, time to discuss about leverage in Forex.

When I first started delving into the Forex world I used to wonder "How do people make money trading currencies? The movements are so negligible!"

Let's say for example that the pair EUR/USD is trading at 1.4000. That means you would spend $1.4000 dollars for every Euro you wanted to buy. You would enter this trade wanting the Euro to go up. Let's say you have $1400 US Dollars and you buy 1000 Euros with them. Now you have 1000 Euros and hope the Euro goes up against the dollar.

Traders comparison (penny stocks)

For those who lose their asses over and over trying to make easy profits with penny stocks, here is a comparison of the performance of the most popular alert services out there today.

Go to the bottom of this page in order to see the Legal Stuff

Tuesday, November 9, 2010

Butterfly play on the SPY

This is a very simple idea to speculate on the movement of the SPY.
As of this writing SPY is trading at 122.73. The idea is that the markets will keep moving strong or in any case they wont plummet anytime in the next 10 days. So, I came up with a Butterfly that looks like this:

BUY 1 SPY NOV 121 CALL @2.23 (-2.23)
SELL 2 SPY NOV 125 CALL @0.37 (+0.37 X 2 = +0.74)
BUY 1 SPY NOV 129 CALL @0.05 (-0.05)

MAXIMUM PROFIT: $2.46 ($246)

Sunday, November 7, 2010

A lazy trader vs a hard working student

I've been a little lazy with the blogging duties lately and there are two reasons for that. First I moved out to a new place which supposes a lot of physical and mental effort lol, and buying stuff for the apartment has demanded lots of hours out of my time. The other reason is that in the last two weeks I have completed reading three books. Yeap, however hard you find it to be true, I have read over 800 pages worth of trading in the last two weeks. I get passionate, which is not always a good thing, and being a lazy trader doesn't mean being a lazy student.

As for the books, the first one I read was "Massive Profits in Penny Stocks" which you can get for free by visiting It is definitely a must read for penny stocks. I am not a penny stocking guy but you know I like reading as much as possible about trading, and this book can definitely help you understand the world of penny stocks and use the strategies exposed by the author in order to be profitable. And although you may or may not be a penny stocker, this book is for free anyways ;) Don't go naked to the penny stocks war!! You are warned.