OptionPundit

Category: Option Trading

  • OPNewsletter Jan 2012 up +1.8% (Open)

    So far, OPNewsletter is experiencing a great start to a new year by gaining +2.6% during the first trading week of the year to close at +1.81% from -0.81% last week. So far we have invested almost +60% of the capital and are sitting on 40% cash that we’ll start using shortly for other portfolios.  Our objective is to invest only 60-80% of the capital and keep remaining capital for the exceptional opportunities or for adjusting the portfolios as when the need arise. This past week even the FREE WMT trade,  also hit its +50% profit target. Congratulations if you took it AND booked profits.

    So far the star in this month’s portfolio are RUT and VIX up +13% and 14% respectively. I have started including VIX from Jan 2012 and I expect it now become a regular income generator. Recently I also surveyed OPN members to explore possibilities to include futures. The response is positive and probably sometime in next few months, I will adding another leg to the OPNewsletter to generate additional alpha for the members.

    If you are an OPNewsletter member, pls click here to access the latest P&L Tracker.

    In short, Markets continue to remain volatile and while US decoupling continues, there is wide range of opinion spectrum, ranging from expansionary US economy to recessionary estimates. John presents a vivid scenario on why it doesn’t look very rosy, Bill Hester lists five global risks that you may want to monitor in 2012. EURO has already hit 11year low vs Japanese Yen. Here are some thoughts from Bill (Towards the Paranormal) on what to do-

    Until the outcome becomes clear, investors should consider ways to hedge their bets, including: maximizing durations, U.S. Treasury bonds that may potentially offer capital gains, long-term Treasury Inflation Protected Securities (TIPS), high quality corporates and senior bank debt, and select U.S. municipal bonds.

    Well, whatever the outcome maybe, it is not going to be easy to trade via equities. While I am of the view that this is not going to be a glamorous year and uncertainty will continue, I continue to favor Options Trading to ring outperforming gains making it an exciting year. Join now if you would like to reap benefits from another confusing year for the markets. If you don’t want to be directional but still would like to trade the markets to add alpha to your portfolios, OPNewsletter may be the right choice to add to your investment toolbox.

    Profitable Trading, OPбългарски икони

  • OPNewsletter Nov +7.1%, Dec +1.66% (Open)

    There has been terrible deterioration in the stock markets. As I shared separately, even though markets might be in slightly oversold state and may rebound, my composite model is still in the SELL mode. In spite of such a broad deterioration, for OPNewsletter, we are still doing fine.

    During Dec portfolios, SPX dropped from 1292 to 1159, Russell 2000 dropped from 748 to 666, NDX dropped from ~2412 to 2150, GOOG dropped from 618 to 563 and so on. OP Newsletter closed Nov for +7.1% gains and for December, we are up +1.66% as of Friday close… these results don’t include results from speculative trades. If markets stabilize here, our portfolio will gain even more, dramatically increasing returns.

    I also shared/started a new thread on VIX futures, the trades have been extremely successful with a very high win ratio. However, those are not yet ready to be implemented in the OPN, but I am developing a plan so I could include it as well. Besides those who are on IB, may also look for some other opportunities [e.g. global indices, not just yet though].

    This is how some subscriber thought about OPNewseltter several years back. Mike is still a member of OPNewsletter.

    I love this newsletter. It’s probably the best thing that ever happened to my trading career. I’m a sort of a risky trader and have lost a considerable amount of money in my past. I needed to follow someone I can trust and see how trades are executed and learn. This is exactly what I needed. I’m beginning to make money recently not only because I’m following some of your trades, but because I’m getting good ideas and learning how you trade, which is invaluable. I’m a full time software engineer and do not have the time to investigate stocks at the same level as you do. Therefore this is essential for me to be a successful trader because a successful part time trader is a tough goal.

    I have already gotten one of my co workers to sign on the list (Bryce catlain). He is a fellow engineer and he is VERY systematic. He is following your trades and analyzing your performance before he decides to put in real money. So far he is quite impressed.

    I do however have one concern. I know this list is not open to the public, meaning not everyone on the Internet can join. This is probably a good thing, but when does the amount of people joining begin to affect the trades? Most of us are small traders, meaning we’re probably trading with less than a 100K trading account. But I’m wondering what happens if more people learn about this list and you get big time players (like, say, a hedge fund manager) who deals with millions of dollars. Can this affect our trades? How do you protect against adverse results from the amount of subscribers?

    Thank you for allowing me to join. I truly believe I am on the way to success begin a part of this group!

    Mike Karmindro, San mateo, USA
    Investment experience: 4 years trading options

    If you would like to read more on what other members think, pls click here to read more and in-depth testimonials. We will shortly start Jan 2012 Income portfolios.  If you would like give more stability to your portfolios in 2012, generate stable return while minimize risk, you may want to give OPNewsletter a try. Here are 7 reasons why you may want to give it a try.

    As a new member, your first month is free if OPN doesn’t make money in that month. To join OPNewsletter, pls click here to sign-up for the waitlist.

    Have fun, profitable trading, OP

  • OPNewsletter Oct +3.45%, Nov +0.75% (Open)

    This is a tough market especially for income traders. What kind of market it is, Bull? Bear? It’s a confused market that is driven mainly by news, rumors especially out of Europe. But let’s face it, markets were/are/will be driven by news, most of the time, if not always. There are times when “irrationality prevails” on either bull’s or bear’s side and that’s when fundamentals come into play. This is also true that traders need to make money and those who nothing beyond wall street, this is a daily job, so you gotta deal with it as oppose keep crying or excusing one or other thing. It’s tough out there. But at the same time, there are opportunities around, so keep looking for it but be more careful with your capital.

    For OPNewsletter, Oct Income Portfolios delivered +3.45%; not as much as I would like it to be but this is what it is. These results exclude results from Gold trade resulting from quick bearish and the bullish trades,  GMCR and AZO bearish trades and SPY bearish trade at the mid term top on Sept 29th, +40% to +60% gains GOOG earning trade, partial loss on ISRG, over +100% gains on AAPL earning trade and many more…after filtering 100s of stocks, I shared “potential movers” list before earnings and to OPN Members, I shared structured trades as well….

    Though the gains looks wonderful, pls note, as part of our strict operating discipline, we don’t spend lot of capital on such speculative trades. These are used as a portfolio accelerator opportunistically but these are not the main driver…OPN prefers to drive at a consistent speed safely…

    I have being about 16 years witnessing my capital being managed by different brokers. Some brokers were purely option traders and others were stock fund managers. I have had both very good years and bad years but progressively the good years have being vanishing. Last year I decided to start working more aggressively to learn different options techniques and put them to the test. In my search for knowledge I came across the Option Pundit website. On my first month of trading with OP, I made enough money to pay my annual subscription and provided a good boost to my portfolio. Option Pundit is well tuned with the market and exhibit option trading techniques far more sophisticated than my previous options brokers. I am also very impressed with the caliber of many forum members who constantly add valuable comments and information. My experience these first two months with OP have being very enriching and rewarding.

    Luis González
    Thousand Oaks, California, USA

    Luis shared this with me when he was only 2months with OPN..and he continued with OPN for almost 40months!! He recently paused as the work environment has become more demanding. You may read more subsciber’s testimonials. There are many such members who are still with us from the day 1 and that’s invaluable. We have build a data base of key lernings from the past trades, we experiment with new styles/instruments while staying focused on conservative income producing strategies. There are no short cuts to success especially that deals with financial markets. It’s a journey. In reality there are no such thing as….5mins a day/gazillion % returns. It’s a business and just like any other business, it’s hard work which requires its own subsets of principles, processes and systems.

    We have started our Nov Income portfolios, and as of this week’s closing, we are almost flat at +0.75%.  We are still 60% in cash and look forward to some opportunistic play. Earnings’ season is in full swing so I expect to add more carefully selected speculative trades while still aiming for 5-7% returns on the overall portfolios. If you would like to join OPNewsletter, pls click here to sign-up for the waitlist.

    Have fun, profitable trading, OP

  • OptionPundit Interview: Author and Investor Jeff Augen

    Jeff Augen, currently a private investor and writer, has spent more than a decade building a unique intellectual property portfolio of algorithms and software for technical analysis of derivatives prices. His work includes more than one million lines of computer code reflecting powerful new strategies for trading equity, index, and futures options.  He is author of The Volatility Edge in Options Trading, The Option Trader’s Workbook, Trading Options at Expirations, Day Trading Options, and Bioinformatics in the Post-Genomic Era (Addison-Wesley, 2004). Much of his current work on options pricing is built on algorithms for predicting molecular structures that he developed as a graduate student. Read more about Jeff here; you may also want to read read my review of his earlier book “The Volatility Edge in Options Trading“.

    OptionPundit: Jeff, It is a pleasure to have you with us.

    Jeff Augen: Thank you.

    OptionPundit: Jeff, is there a KEY MESSAGE you would like to share with the readers before we begin our discussion.

    Jeff Aguen:  Before 2007/08 financial crisis, markets were stable. Volatility was low, markets were rallying. There were hardly any “flash crashes” and terrorist attacks were the only major uncertainty. However, since 2008 market structures have changed. Government involvement, inter connectivity of global markets and evolution of HFTs all have now changed the way markets react to news. Individuals who limit themselves to using traditional off-the-shelf indicators will always lose money to sophisticated traders armed with more powerful tools. The days of buying and selling stocks when moving averages cross or an oscillator reaches one side of a channel are gone. Moreover, investors who fool themselves into believing that they can exploit combinations of these indicators are making a huge mistake. Times have changed.

    Now program trading accounts for almost 80% of the trades. Super computers are being used and accordingly character of the trades has also changed. An example of how markets have changed is the intraday volatility; since 1990 S&P has experienced intraday High-Low transitions > 8% only 14times, 13 of which occurred in last 2 years. Today’s sophisticated investors tend to focus their attention on analysing subtle statistical distortions in volatility and identifying anomalies in derivative prices.

    OptionPundit: Jeff, as market structure has changed, can the retail trader still trade profitably? What would he need to stay in the game?

    Jeff Augen: The old way of using various indicators e.g. Momentum, stochastic, MACD is gone. He needs to realize that HFT’s /super computers will nullify any trends etc. by the time it is even visible to a trader on the charts. Retail trader need to understand the followings-
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  • OPNewsletter Jun’11 up +10% (Open), Jul’11 up +1.7% (Open)

    Costco (COST) is down almost $5 since I last shared a FREE trade idea together with a simple trading strategy, those COST puts, easily hit the profit target identified in the post and if measured point to point, are now up +70%.  NFLX bearish trade resulted into nice gains within a day of my posting bearish NFLX trade idea on Twitter for free as NFLX dropped almost $12 by the next day. Apple computer (AAPL) lost almost $11 since another free AAPL trade idea I posted on Twitter (during WWDC). This was a strategy we have been following for past 6 years. That’s for directional trade. Our majority of capital lies in income trading. For OPNewsletter Income Portfolios, we are up over +10% while Markets been down almost for 5 weeks. OPN Jul’11 portfolios are up also up +1.7% while we are still opening new trades.

    Markets have been declining for the past 5 weeks and during this time a lot of buzz has been generated on just how much economy has deteriorated and/or whether or not QE3 is on its way. It’s natural, when the markets are decidedly higher, you’ll hear mostly the good stuff. However, when markets are pulling back, bears’ voice gets stronger and stronger. All said and done, keep in mind that major markets haven’t yet pulled back even 10%!!!
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  • OPN Mar +9.5% (Closed), Apr +4.7% (Open)

    OPNewsletter Feb’11 portfolios were closed for +6.4%, Mar 2011 for +9.5% and for April 2011 OPN portfolios are up +4.7% (while we still have a few weeks to go). The performance continues and again proves the consistency of income generation via option trading. All this in spite of market meltdowns during these periods. Hope you traded free trade NFLX I shared in my previous post and booked nice gains.

    As markets are entering into an interesting phase ahead, I would like to invite previous OPN members to re-join OPNewsletter to capitalize upcoming opportunities. There will be NO WAITLIST fee for ex-OPN members who would sign-up by March 31, 2011. As you know, OPN works with limited number of members so I would encourage you to sign-up at the earliest. Pls click here to sign-up (The wait-list fee will be refunded and a follow-up invite will be sent soon after).

    I am glad that OPNewsletter continues to add value to members. Positive feedbacks like below are true reflection that OPNewsletter has been fulfilling its promise effectively. It’s my pleasure to share latest testimonial an ex-OPN members Chris sent from NY, USA.

    Hi Op!

    I wanted to personally respond to your offer for x-OPN members to become subscribers again with this offer. Almost every day I think about the times I was an OPN member and the amount of information I learned from you. In fact, it is no understatement to say that you are the only “internet advisor” I truly trust and respect. I am not sure if you appreciate this fully, but your method of approaching option strategies and deploying them has stayed with me from my time as an OPN subscriber. I even still love to read your posts and comments on the market. In fact, as I have become more focused on my own personal trading, I often wish that I could discuss questions and option analysis with you. There are many things I see that I am not sure are correct.

    I know I mentioned this when I left OPN, but the primary reason I could not stay a member was because I was having a job change and would not be able to follow OPN trades. However, this past year I have returned to trading my personal account as my free time has improved. I have not requested to return to be an OPN subscriber because I still cannot always follow OPN trades with my schedule. It is something I am disappointed about because the OPN network is a wonderful place and your insight was often invaluable.

    My personal trading has had some nice successes this past year. In fact, several months you have reported your results, my performance has come with 0.5% of yours (I still track my results with your spreadsheet and return calculations). I consider this a great success, but I do still fear I am making some serious mistakes in risk and adjustments. I am sure your results are much better risk-adjusted returns. 🙂 Many of the option strategies I deploy have come largely from the methodologies I learned from you, so maybe this isn’t so much of a surprise!

    …

    I wish you the best of successes and I hope that your subscriber base is continuing to grow. If you ever open an advisory service or different method of being an OPN client, please let me know. Your experience and advice is invaluable and I miss it greatly. 🙂

    All the best,

    Christopher Gorzynski
    Long Beach, NY, United States

    Markets are entering into an interesting phase ahead and I feel plenty of opportunity will come along the way. If you are an ex-OPN member, come and join now. No WAITLIST fee for x-OPN members who sign-up by March 31, 2011. Pls click here to sign-up (The wait-list fee will be refunded and a follow-up invite will be sent soon after).

    Profitable Trading, OP