LONG TERM CHARTS.
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The global central bankers have destroyed all price discovery and the expected business and economic cycles with their non-stop intervention in world markets since March Therefore, the year secular bear may right-translate and growl for another year or two the central banker intervention has created years of bullish joy interfering with the natural year stock cycle.
The expected secular bull market cycle lines up perfectly with expected future inflation and hyperinflation. Global inflation currently remains Godot. The reason inflation is not occurring to any great extent for the last many years is that wage growth is not occurring. Inflation cannot exist without wage growth.
This is consistent with a stock market in retreat. When wage growth kicks in, and the velocity of money ramps higher all the money sitting at banks is put to work creating a multiplier effect for the economy , probably in , inflation is going to take off higher like a banshee. This is when the rise in Treasury yields will be real. Then, beyond that, say and on, the economy will overheat. The velocity of money will be running rampant and the US will jump into hyperinflation which is going to be a future nightmare.
This hints that the stock market plans on making lower lows, say, 2 to 5 months out which would be late February through May.
The SPX weekly chart is near a bottom as begins. Thus, in the immediate term ahead, stocks will likely find a bottom as begins, say the first half of January, then rally well into February. At that time, or somewhere in that late winter early spring area, stocks may top-out and take the next nasty move lower to honor the weak and bleak monthly charts.
Another market driver in is the domestic and geopolitical news. The Tweeter-in-Chief begins holed-up in the Whitehouse due to the government shutdown. Stocks may push strongly higher on a happy agreement which could be timed with the SPX weekly chart recovery. President Trump and Chinese President Xi continue the trade war.
Both men are slaves to their economy and markets so it is in their interests to make a deal. The United States made China a superpower over the last 30 years handing the communists the keys to US technology. Nonetheless, both men will likely tout a great trade deal early in the year which should provide a bump for global markets.
If a trade deal occurs in January, it can add fuel to the projected rally coming on the SPX weekly, however, if the US and China continue bickering, a deal may have to wait until both markets tank, due to the weak and bleak monthly charts, in say, the April-June period.
That is when a big sustainable stock market rally may begin. This would provide a double-whammy bump higher for their stock market and economy to begin the year. Always remember, the central bankers are the market and they created the all-time record highs in equities into September The US remains in a low-rate environment.
The world is awash in liquidity. Federal Reserve Chairman Powell is expected to grow more dovish if the weaker trend in US economic data continues which will support the stock market. The Federal Reserve dovishness low rates for longer and PBOC easy money reserve requirement ratio cuts at the banks allowing more lending should create buoyancy in the stock market early in the year.
The central bankers are the market. The US and China are meeting on trade in a few days. The second and third tier negotiators are set to meet. This tells you that there are many details being put to paper and progress is occurring, however, it also says the trade deal is likely further away time-wise. When the bigshots become more involved in meetings showing up to take credit, the deal is likely close to closing.
That is not happening now. The US-China trade deal may occur when the stock market collapses due to the monthly chart weakness stocks bottoming in the March-July time period.
A collapse in stocks both for the US, and the communists, would focus the attention of both sides to resolve the trade war.
Taking the ideas so far and molding them around in your hands, like clay, you can see stock market choppiness ahead to begin the year but the SPX should place a nice bottom during the first couple weeks or so say mid-January of the year and begin a multi-week rally.
A trade deal is likely pushed off for months ahead. Stocks should peak somewhere in the February-May period and take a big drop lower with lower lows printing on the charts in springtime. This may be a May to July bottom in the stock market when a trade deal occurs.
A US-China trade deal and the third year of the presidential cycle may then kick-in with a bigtime upside rally. Most people will likely be very bearish at the bottom just when perhaps a trade deal is announced. Stocks may then rally from the early summer bottom up big into August-September.
Then, to end , say the last three weeks of December a sharp rally higher. A recession should take hold this year. Many say is when the recession arrives and others say No one expects the recession to be upon us in the weeks and months ahead except, of course, Keystone. He expects the recession and recessionary behavior company layoffs, sales falling off, negative moods developing to begin in Moreover, with such flat counter-trends even a tiny change in the formula leads to date change, making the turning dates not statistically not robust at all.
This is the Bradley standard model original formula according to Donald Bradley from December through January In there are 4 major turning points: Strictly speaking the siderograph dates are potential turning dates, bifurcation points in the language of chaos theory. In addition to the standard model there are 3 other models in the premium area, which may be quite different. All Bradley analyses in the free area since can be found here. In there are 3 major turning points: The other Bradley dates are: The 2 most important siderograph dates are: This is the standard model for December - January It has the following turning points: Some Bradley model analysts would also include "micro spikes" but I strongly advise against that because that's not significant enough and should be interpreted as "white noise".
For unknown reasons there are even minor differences between the different software programs that all use the original formula of Donald Bradley. While major turns in the Bradley chart are more or less identical you would get entirely different results if you zoom in too much.
Next year there are only 8 potential turning points, with the last 4 being more significant bold letters than the first 4 window: Some Bradley analysts would also include the " micro-spikes " of the 1st quarter but I strongly advise against that because that's not significant enough and should be interpreted as "white noise".
Below please find the Bradley siderograph original formula for December - January The other 3 siderograph models reserved for Amanita subscribers differ from the shown standard model considerably.
Perhaps you want to know now which one is the "correct" siderograph - the answer is easy: Since Bradley's time dozens of similar models with different parameters have been created, partly optimized with the aid of artificial intelligence and for specific markets oil, currencies etc. A date which occurs in several different models is probably important.
The older Bradley charts can be found here. How to receive the raw data: By including declinations, Donald Bradley has probably unwittingly created the formula so that it mirrors the usual seasonal pattern "sell in May and go" - but for this purpose you rather use the seasonal charts and not the siderograph.
Another possibility is to predict inversions but to my knowledge all attempts have failed so far. I always stress that only the date of the turn is meaningful but not if it's the high or a low in the chart of the siderograph. It's interesting to analyze the polarities top or bottom: It seems that some colleagues continue to use the siderograph as an indicator for rising or falling markets despite this claim can't pass an empirical test. Until year-end there is only one major reversal in store: Every few months I send out an update on the Bradley siderograph , below please find today's comments.
This is the Bradley siderograph standard model for explanation Bradley siderograph: This analysis is based on the standard model only that is available in the free area, the other models are reserved for subscribers. Whether a date is a top or a bottom in the Bradley chart is meaningless even if that is claimed to be the case by some sources , i. As this review shows, you can certainly be very satisfied with the performance of the Bradley as an isolated indicator, in the CSQN model the siderograph is a "positioning factor" and thus among the 3 highest-weighted out of 2 dozens.
The last discussion of the Bradley siderograph dates back to Sep 20 so it's now time for an update of this cosmic indicator whose significance is overestimated by light years. Just as you pointed out, as you widen the distance between the legs of a credit spread — i. Also, when the legs are wider apart, a smaller adverse move in the underlying can push the spread premium up to your MRA maximum risk amount. In other words, you would be forced out of a position by a smaller negative move.
Recall that our spread can have up to two intervening strike price legs. I placed the trades 25 days from expiration and all conformed to the rules. From my perspective there are two ways of looking at this, on one hand 1. I did notice that credit spreads that were on the other side of some support or resistance lines did better.
By only using positions that had a technical advantage might have increased your overall profit results. Lee, I know you said that 8 of 10 trades go well, but for beginners that kind of follow the rules blindly is this month kind of typical? Does more experienced safer traders use technical analysis and increase there return percentage?
Thanks for the clarification Lee. The Deltas and Distances are in place, for example. However, the option delta calculation incorporates historic volatility into the calculation, so I would expect the resulting delta values to be as useful as they are for regular 1X underlyings.
But, to be on the safe side, I will check into this further just to be sure! Just as we have a mimimum requirement for price of the underlying, I also want to see a minimum average daily trading volume for the underlying. I think to hedge your IC , even if it means taking in less credit, by buying an extra long put or call, you have a wider area that the underlying has to travel in regards to threatening your short options which could give you higher probabilities of success.
Been trading for income for about 8 months now and like the Monthly Income Machine model. However I have a hard time finding qualifying trades. Especially in a relatively low volatility environment. Also, I may have to accept less return on margin to satisfy my premium targets by widening the spread. Position size and the percentage of portfolio committed are a function of individual risk appetite. My position size is small, typically contracts not exceeding max risk of 2.
I need to get more disciplined on closing trades when they go against me and approach the short strikes….. Trading can challenge all of your weaknesses so the only choice is to eliminate them or overcome them. The fight goes on. Bill, I appreciate your feed back on position size. I struggle with knowing how much to place on any particular position.
Depending on the size of your account you may have to use a larger percentage of your account to make it worthwhile. The 25 trading days out is a good time frame out because the time value starts to leak out rapidly even if the underlying moves in your direction.
But I would be glad to see your back testing results. I made a mistake this month on placing a trade on CMG right after a earnings report and gap down and for only. It filled the gap quickly and put me in the hurt. I rolled up and got hurt gain. I placed this trade knowing that there is a likelihood of it filling the gap. I also paid for a lesson in why you need to get the minimum.
With that small of a premium the chance of it hitting your MRA is increased. Bill is right about trading exposing your weaknesses. Also new to options trading and finding conforming trades difficult. Was surprised is this IV or what??
Lee, Base hits and homeruns. I tend to relate subjects to sports when explaining something. I would compare credit spreads to base hits in baseball. While getting on base is important and essential to winning the game, home runs help too. Do you have any advice on going for the occasional home run or should I forget about the big-gainers and focus solely on consistent income from writing spreads? I think I know what your answer will be, but I wanted to get your thoughts on the subject.
If the plan is a risk-adverse technique to generate a stream of monthly income, trading around earnings reports is — as you certainly expected me to say — absolutely out. For real home runs, your best bet is probably outright purchase of out-of-the-money calls or puts depending on your directional bias. While we must keep those in the path of Sandy in our thoughts and prayers, it seems to be that the market being closed for a couple of days gives us sellers of credit spreads a time decay boost withing any risk.
Am I correct in my assessment? Yes, more important things than trading going on right now. But, your statement is correct.
Expiration dates have not moved so theta is still working in your favor for OTM credit positions you have in place. However, potential trade set-ups are also being eroded, denying opportunities.
Im just starting out with Safertrader and finding that a disproportional amount of commissions are being paid in relation to profits made. There is not as many brokerages in Canada that offer credit spread abilities and allow them in retirement accts.
Yee haw, I am liking what I see. Would be nice if the forum were more active, though I guess everybody has something better to do. Wondering what everyone thinks of November expirations as being disqualified because of the election. Seems like that carries a lot more weight than a companies earnings…what say you experienced ones who have been through an election year?
I would have guessed that something like that might be a market-moving event. Just curious what anyone thought. I just ran a scan on the entire list and every spread is headed in the right direction. Well, I ran the results from the entire list after the fact as I was not set up and ready to trade yet.
The importance of setting and sticking to exit rules for each trade cannot be stressed enough. Without strict adherence to maximum loss rules, this run could have easily wiped out YTD profits or worse. Discipline when enforcing exit rules will help mitigate the effect of the statistical anomalies that will occur. I found a trade within 10 minutes of opening the spreadsheet. Do you have a rough estimate on when the screener will be up and running. I have observed that on the time I had to do adjustments, unless I roll it to the next month, I will certainly take a loss.
My plan is to avoid a loss, and just take a lesser return or even breakeven, so rolling seems to work except if there is a big drop. My observation also is that if I just do trade adjustments thru rolling to the next month on the last week, this seems to prevent me from taking a loss. The risk will be if the stock crosses beyond the short leg which and for some reason I can not rollout, then I will really take a big hit. I am wondering why. Is it because RUT have higher open interests?
Do you also have same experiences? You are certainly right about the SPX being relatively difficult to get filled. You may want to check out http: It covers a number of the beneifts and drawbacks of each. One of your recent emails mentioned a 2nd Edition of the MIM book.
I think I have the 1st edition. Is there any reason for owners of the first book to read the 2nd Ed? The book has been expanded to include some explanations of items not covered in the 1st Ed such as why we recommend NOT using weekly options for credit spreads, as well as attempts to clarify sections where readers have indicated they still had questions.
We also updated the examples to refer to more recent trades, market-wide headline developments, etc. Bottom line, it is not necessary to read the 2nd Edition if you have already absorbed the material in the first edition. But if enough 1st Ed. I got that part. Now what do i do if market is between breakeven and short? Also if i am not using stop, how do i exit if market is just above my long, or just below on thursday?
Does anyone have experience with Fibonacci Retracements? I think the use of these with credit spreads could be very powerful. Any tips or recommendations on good books or websites would be very appreciated. I am worried about flash crash, big drop in price with big jump in volatility especially with the current market volatility. Is there a good way to protect our iron condors against these? I would buy the same expiration as IC and it will not cost you so much for the near term.
Do experiment and do some volatility simulation tests to validate the effectiveness of this method. For that reason, I personally tend to favor bear call spreads if I am choosing from among similar trade candidates. The risk is greatest — by far — with an individual stock where a disasterous stock-specific event can hit the newswires. However, a one-day drop of that magnitude is very, very unlikely for a major index. If one is really overwhelmingly concerned about such an occurance, he should focus his trades on indices, and do so on the short side.
Also keep in mind that SaferTraders are exhorted to always have an MRA maximum risk amount in force on every trade, backed up by an actual stop order in the market. While this will not guarantee that you will be filled at your stated stop price if the market takes a sudden swoon, it will assure that you are at least taken out of the market.
Also, as mentioned by another FORUM user, one can use an unbalanced bull put spread when he wants to use a bull spread — one that has extra long options compared to the number of short options in the spread. I have been checking for stocks or indexes that meet the requirements this week with no luck. Does the earnings season mess up the premiums?
This is my first month and would appreciate any clues on a stock or index. Hi Pat, one of the entry requirements that Lee has in his book is that you do not want to trade stock options during announcement or earnings months due to the chances of a large move. So, patience is a virture! You might look a little further in time. I have been paper trading this system for some time and have been very successful with fake money, my problems began when I started trading with real money imagine that.
My first 3 live trades hit my MAR of 2x premium received, forcing me to exit the trade. What makes this so frustrating is that seemingly as soon as my stop loss is triggered the stock turns right back around only to expire worthless. I am asking for any advice on technical analysis. If anyone can recommend any tips, websites or books to improve my timing and confidence it would be greatly appreciated. Thank you in advance. It sounds like to me that maybe your condor is not wide enough.
Are you making sure that you are trading in months without announcements, dividends, conference call, etc? Like I said it is hard to advise when you tell us so little about what you did. Wish I could help more. Hey Mike, it is impossible to help you with your trade with what you have told me. I need to know more about what you traded and your strike prices etc to be able to even begin to know how to help.
Based on what you said the answer would be so general and vague that it would not help you. Also, can anyone give some good advice on what websites will tell you exactly when the next earnings reports will come out. I apologize for my lack of knowledge on the subject, but there are a lot of websites out there that will tell you when the last earnings report was out, but they will not say exactly when the Q2 earnings come out.
I good site for general information is http: At the upper left hand side of the screen type in the ticker symbol of your stock. Another method is to find out when the last earnings was, it will be 3 months later. Every company has its own unique earnings date every 3 months. Lee, from a SafeTrader perspective, how many trade should I have.. Whats is your thought process on diversification? Hi Lee, When I hit the confirm and send key to place a trade with my brokerage firm, it tells me the cost of the trade including commissions.
Can you shed some light? If you are short a stock and the ex-dividend date passes, you are the one responsible for paying whatever dividend had been declared. If you are not following the rules, however, it is possible to end up short the underlying stock obviously, this does not apply to cash-settled options like the RUT and SPX.
Long a put that expires. If you are long an American-style stock or ETF put exercisable at any time , and it expires in-the-money, it is automatically exercised. That means you sell the stock at the strike price of your put. You are now short the stock. If you hold the short stock position after the ex-dividend date, you are responsible for eventual cash payment of any dividend that had been declared. Long a put that is exercised early.
If you are long a put that is in-the-money, and you decide for some reason that you want to exercise it and intentionally be short the stock, rather than just selling the put and taking your profit, you will be liable for paying declared dividend as noted above. If you are short a call that is in-the-money, or close to in-the-money plus a big dividend has been declared, the person who is long that call might decide to exercise it before expiration early exercise if the value of underlying plus the dividend he would be entitled to exceeds the strike price.
If he does do an early exercise, you are then in effect short the stock and will be liable for the dividend as of the ex-dividend date. Lee, Thanks for your quick response to my question about SMA, you are awesome! My question is about other technical indicators. At what point do we risk paralysis by analysis? My question is which indicators should we pay attention to and which indicators should we ignore?
Mike, As you note, there are more technical indicators than you can shake a proverbial stick at. Generally, the shorter the time period of the moving average filter or chart pivot points , the more signals being delivered will turn out to be bogus.
I come down this way: Lee, when we have only 10 days left to trade before expiration, is it ok to go to a higher delta to get the minimum. This assumes the chart is flat or trending in our favor. The orthodox answer is that the current delta value already takes into account the reduced amnount of remaining time. But I would suggest you not give an inch on whatever MRA you had originally decided upon. In other words, what I need is to be able to determine what will be the approximate stock price that will put my short position with a Delta of This has now come up several times in the past month or so.
Hope to have a detailed article on the specifics of using contingent orders for protective stops out to everyone this weekend. Thanks for the reminder, Felipe!
Anxious to read it when posted. So I worry about paying a lot of taxes…. However the spreads are usually wide in these index options compared to the corresponding ETFs. Psychologically, I cannot trade them because of the perceived higher costs. May I have your advise? Most investment advisors recommend that an investor focus first on profitability and only secondarily on the tax consequences.
Pros and Cons of ETF vs. On the other hand, the indices do have the benefit of lower transaction commission costs dollar-for-dollar of total position value, in addition to the potential tax benefit. It comes down to which issues are more important to you in your situation. Looking forward to closing out April options, thanks to Lee for the coaching. Does anyone have any May positions they are considering? Lee, you mention the sweet spot of option trades to be 10 to 13 days.
Are you refering to calendar days, or trading days. I am in AMZN currently with one week before expiration week. Looking great so far. I am exactly in the center of the risk graph. I was wondering if anyone has ever traded the same stock or index two months in a row?
For example, it looks like AMZN might be a good candidate again. Anybody got any good possibilities on the radar for the April trade? I agree that we can add our ideas for April and that way it is easy to share ideas and learn. I just joined safertraded community and trying to learn. Ron, I too am new to this type of trading. In the last three months I have traded some of the same stocks consistently and the trades have worked out well. Bidu has been a good Iron condor trade.
IOC has been a good call spread, and Wynn has been a good call spread. If anyone else would like to contribute April ideas it would be welcomed. Surly if we all add a couple of ideas monthly we would all benefit. Thanks for the response Mike. I will check them out!
Keep in mind that this is what I am looking to do and not telling you what YOU should do. Trade at your own risk.
There is an inexpensive way to screen and filter option spreads that meet the Safer Trader criteria. First go to http: One for a bull put spread and another for a bear call spread. You can then filter by expiration month and take the raw information, check the delta values, use personal judgement, and go from there.
By the way the site is free but you have to register. I have looked at this site. I have looked at the site. I have gone to the custom screen, but am more confused. Lee, I have a quick question for you. When looking for candidates to trade I will sometimes find that there will NOT be the minimum 0. However the Delta values at this distance is very low like 0. Could you explain the relationship of a very low delta to the premium.
Since you have the ability to adjust the trade if it gets close to your Short position, please help me undestand. In short, can a low Delta trump distance from strike price? Distance is the most important factor contributing to the safety of your position. This is because delta is a mathematical estimate of how likely the universe of investors believes the underlying will move from where it is now given the amount of time remaining.
The tendency of investors to overshoot the mark elation or depression is a well-known attribute of market action. Thanks for the valuable advise. Since I feel uncomfortable in moving my strikes closer to the underlying, I adopted 2 methods to squeeze the 0. Move further out from the expiration. I used to trade days to expiration now I have to do it about days to expiration. I have still yet to try legging into the IC trade as per your mention to see if it will help in achieveing the overall premium target.
NeodX is spot on with his observations of methods of dealing with low volatility periods. If any of you missed that email and want to review it, let Dorrie know info SaferTrader.
I am sure she can get a copy to you. Lee, I just finished studying your book. You have given all of the rules necessary to execute your trading strategy. And you did it with just enough additional information to enable a proper discussion of your rules. I have read about a dozen books on option, and attended many, many hours of classroom instruction. Hey Lee, just read your book and looking forward to trading.
I have been paper trading another options system successfully. The other system works but you have the higher probability of adjusting more to stay profitable. I want simple, conservative, and profitable, what I call SCP. Thanks again, and I will keep you posted. Hi Lee, In looking for candidates that meet criteria, how often should we recheck our list of possibles that have not met criteria of premium presently.
Do you think it is sensible to recheck on a daily basis. As time passes and we lose premium, is it reasonable to think that in a day or a few it may increase in premium enough to meet premium criteria? What do you think? Challenging low volatility environment recently. Melt-ups can be difficult for this type of trading. Must remain disciplined to the entry criteria. No need to get into a bad trade just to be in a trade.
Hi Lee, purchased your machine product. What tool do you use to go through your watchlist? My own process is spelled out in the article at http: I also will use my brokerage OptionsXpress screening tool where one can enter a minimum price,a volume constraint, etc.
Lee, With the same delta on the short call 0. It seem that the Call Spread is always further away to the underlying price as compared to the Put Spread. Is this a concern or should I adjust further to maintain an almost equidistant? A credit spread that is equidistant from the underlying in terms of delta might superficially seem to be ideal. If that is indeed the case, it is not likely that you will be able to meet the percentage distance-from-the-underlying, within the entry requirement for minimum premium.
After all, what good is delta equidistance if the premium on the spreads at the right distance away are too paltry to justify even minimal market risk? What normally happens — at least with my trades — is that I am first able to enter the bull put spread or bear call spread, and then if the market moves sufficiently away from my Strike Price, it may well put the desired opposite leg of the iron condor within reach of all the entry criteria including its delta.
Its significance is most useful at the time you enter the position. But money management — more so than the accompanying delta rise — takes precedence in deciding if it is prudent to exit from a spread going the wrong way.
I put on a bear call spread on the SPY on Oct. These numerous small wins in a short period of time add up to a high ROI if all goes well. Since the 8 expected winners will be relatively small, it is CRITICAL that the 2 expected losers not be so big as to wipe out the gains of the wins and leave us with a net loss.
Hence, we have to limit the dollar loss assocciated with the potential losers that inevitably will occur. So the investor needs to set a risk limit on every trade. Please review pages of the book for a discussion of trade managment. Also, you might want to read the white paper blog: Lee, I consider myself a successful spread trader as I rely on the income trading produces.
I agree with your sentiment that there is no consistent success without unwavering discipline to the trading rules proved to be important. My experience is that I find plenty of monthly candidates for spreads, typically on the PUT side. Like you point out, I always look to maximize my margin but a good fill on the CALL spread to complete the condor is not nearly as common. I hope your audience has the perseverance to give the methodology in your book a chance, it works.
I just read your report http: However I still have a question that will you only do credit spread not iron condor. I am always on the lookout for an iron condor because of the big margin advantage, but most of the time I turn a credit spread into a condor when the market moves in the direction I want away from my current spread and I get the opportunity to put the other spread on because of that.
I usually use contingent stop based on the underlying stock or index price when my stop is based on a violation of a support or resistance level that would occur before my MRA was threatened.
Otherwise, I use a stop on the options themselves that I enter after the market opens each day. Have contacted some friends with very strong math credentials to see if they are able to produce a formula for estimating the price of the underlying has to be in order to trigger a stop on the option spread at a specific option spread value.
Will let you know if I find an answer! Suggest you view each part of the iron condor as separate trades for purposes of risk management. Accordingly, I would set my MRA maximum risk amount independently on each spread. You are correct to be concerned about option order stops being filled on the open before the underlying has actually begun trading, the result being terrible fills.
When you do have an OPTIONS stop order active in the market, it should be entered each morning a while after the opening when the options are actually trading as opposed to reflecting dream-world bids and asks.
This cures the problem you face when you leave an option stop order in the market all the time as good-until-cancelled one that could well get hit on the open. Please check out these two blogs:. Lee, I did not receive your book yet, but I have been trading iron condors before, today I put this one on which looks good to me as I do them, but have not yet been profitable.
What would you do differently iaw your system? What am I doing wrong, or does this one look good? But, if you are willing to assume that as an actual risk on the trade, there is a problem. You will find the book is insistent that you have a MRA maximum risk amount for the trade that, if reached, you would take action by exiting the position with a relatively small loss, roll into a more distant spread, etc.
Any ideas how to get out of this?? This, and the wide-spread, i. As my SPY question, how to choose a good strike for credit spread? SPY has 1 dollar for each strike not 5. How to find a good credit premium? Another question, recently, the market is chappy. What should we do to do for monthly income? While we can going to do iron condor should we need to define the market trend to do Bear Call or Bull put Spread or just use the entry criteria to do iron condor.
As you may know guess market is direction is not easy. Of course, since sometimes the market may move a long way in one direction, we also have risk management techniques — including just exiting from the spread entirely — if our maximum risk tolerance maximum risk amount is reached by the market making a very large, continuous move. Regarding doing just the bear call spread or just the bull put spread.
Many invesors — myself included — will establish one of those positions when the market appears to be reaching an overbought or oversold state, or when the price of the underlying is nearing a chart support or resistance level. Later, if the market moves in the desired direction away from that spread, we can look for a similar situation in the other direction and then add the other spread to complete the Iron Condor.
Both spreads should, of course, meet the entry crieteria at the time you establish them. It will be hard to find a good premium. What should I do for this? Hi, New member and just ordered the book. I opened the recommended OptionXpress until my book arrives. Any advice and has your life improved with the safe strategies? I am trying to look for a tool that can help serach for the candidates. Just plug in parameters… Anyone? How about Push Button Option Writer? I bought their software a long time ago.
I dont recall if it can be totally programmed. Hi Stephen, I agree with you that the technology to help in searching for options which fit entry criteria is out there, but is it applied to what we need for a search, and if so how do we access it. Have you had any recent experience with the two possibilities you mentioned in your response. It is a list of recently placed options.
I go through it and identify possibilities, and then use my own screening process. I have found a few possibilities that I would not have found otherwise. Lee mentioned the screens on Options Xpress. I have not found them to be much help.
I appreciate any ideas you have, and would like to communicate with you to see if we can combine our experience and come up with something worthwhile. Thanks for your sharing in the forum. I would like to hear from Eric if possible. I can be contacted at smbeanuniversal aol. Do you recommend trading weekly credit spread or iron-condor?
Also,if you are going to update your book, how about dealing with the criteria for weeklies, since they will obviously be different? Lee, have you ever thought about updating your book?.
Looks like you wrote the book under different market conditions with more volatility. Main rules that need to be changed are the minimum premium and or the the time till expiration. Jeff, the entry criteria are based on studying many years of data that include both high and low volatility periods. We are subjecting our option to greater risk because of the additional time available for movement. I have also traed the SPX, as well as AAPL weeklies, and with the big up and down action this week not for nervous stomachs am ending a very profitable week.
My July monthly RUT Call spread, however, is close to my sold strike, and will probably have to be rolled to avoid more trouble. I have been trading the weekly SPX options for a few months now. No losers so far and fast action. Like trading options on Expiration week, every week….. Hi Jim…I am very interested in the weeklys.
Please Contact me and we can discuss this and exchange information. I have been trading index credit spreads for a long time. Take advantage of the fear and euphoria of the other traders.
There is also a nice Tax break on Index options. There does not seem to be much traffic on this Blog. Is it just that new or is everyone bashful????? Response to Jim V: This is a great opportunity for those of us who use MIM. If we would use it on a regular basis to discuss what we have found in out searches for options meeting entry criteria, it could benefit all of us. I am sure others have found other possibilities. How about putting them up on this site regularly, and we will all benefit from each others research.
We are such a small group that it will have no negative effect on the calculations used to determine out premiums.
You are correct to be concerned about option order stops being filled on the open before the underlying has actually begun trading, the result being terrible fills. This is a chart of the SPX with the Bradley turning dates red arrows , the significance of the Bradley is self-evident.
Due to questions and misunderstandings a preliminary note: