Skip to main content

BAM! Volatility jumped 30% yesterday


We finally have a two sided market. It is kind of funny how markets will stair step there way higher and just fall off a cliff when they need a break. But it is healthy for a market to have corrections and consolidate moves. I don't think anyone was surprised that the market finally traded lower, what surprised most people is how fast it happened. You would think we would know this by now that markets always seem to fall much faster then they rise. I still don't think this changes anything with respect to the overall trend of the market. But I do however think that we could see some price consolidation for the next few weeks in the $147-$153 range.

With that being said I may look into trade ideas for some iron condors that may look attractive now that we finally have some volatility back in the market. I will also be searching for opportunities to add some more high yield covered call plays.

The first place I will be monitoring is the Dow 30 stocks for what you may call accidental high yielders. Here is the scan that I have set up and the different metrics I am looking at:


I already have positions in 5 of the top 10 on this list based on yield. DD or Dupont is the one looking like it has the most potential for me at the moment. But I will wait and see what the market does over the next few days. I would like the RSI reading to get a bit closer to 30 increasing not only the yield but my margin of safety with respect to price or cost basis. If we do get a bit more downside it should also increase volatility a bit, which means more premium I get to collect from the call I will sell against it. All these things lead to a higher probability of success.

If you don't have criteria for a trade, take a moment to think about things that make you compelled to take a position. Then put those things aside and think about what you know about options and how you can increase your edge over the other retail participants.

Please share your trade criteria with us below in the comments. It can be criteria for trades in general, or criteria for certain strategies.

Good Luck Trading!

And 1 favor that we ask: 

If you like the hard work we put into our blog posts and videos, PLEASE help us out by sharing them. Click the share links below and share them on FB, twitter, etc. It really helps us get more exposure and grow IN THE MONEY TRADES!

Comments

Post a Comment

Popular posts from this blog

WOW! I think that sums it up

Many of you have been reading this blog may have noticed that my blogging frequency has increased over the past few weeks as I got short the market. As you can imagine I am down money since getting short the market, this is the time when most people pull away from posting. But my goal is to stay active and involved and show you that trading is not always rainbows and butterflies. It is times like these that the things I have been sharing over the past couple of weeks are so important. You need to trade small relative to your account. I have a decent short position in the market and my portfolios are set up to make some awesome returns if we finally turn lower. But something I would like to point out is that my account is 70% Cash.  I learned a long time ago how important it is to live by the rules you preach. Because of my discipline I am able to continue to hold my positions, I have time and capital on my side. I can't stress enough how important it is not to get to big....
Post a Comment
Read more

Stay Small, Stay Out of Trouble

To expand on my post from yesterday about patience. I want to talk about a very important element that allows patience in a position, and that is staying small. If you trade too big RELATIVE to your personal account size, you are likely to be forced to exit the trade before the trade works in your favor. Many trades myself included have all experienced the pains of trading a position way too large given our account size. There is this predisposition out there that the only way you are going to make money in the financial markets is if you are trading 10 lots of options and 1000 shares of stock at the time. This is not the case, and if this is your mentality you will likely ensure yourself trouble. We have all read the stories of traders blowing up their account. I personally think a good rule of thumb is to not risk more than 5% of your account value on any one position. Good Luck Trading! In The Money Trades And 1 favor that we ask:  If you like the hard work w...
Post a Comment
Read more
more good news from FXStreet : Tom Fitzpatrick, senior technical analyst at Citibank in New York. Monday, July 15, 2002 "Parity is a psychological, not a technical level...and whether we pause around parity or not, we are likely to see significant further dollar losses...Our initial target is $1.03 to $1.0450. If that level is taken out, it actually casts a question mark against the whole of the dollar's rally of the last seven years, and could open up a full-blown bear market for the dollar." Julian Jessop, chief European economist at Standard Chartered Bank. Monday, July 15, 2002 "The dollar is under pressure from everything from economic problems to asset reallocation away from the U.S. and corporate accounting problems. It's difficult to see any positive factor for the dollar at the moment. The root of the problem is the U.S. current account deficit. If the U.S. doesn't have to attract an enormous amount of foreign capital, people wouldn't have to wor...
Post a Comment
Read more