Market Thoughts 9/9/14

I prefer premium selling strategies. My criteria for entering new trades is strict, and coupled with the low volatility environment in the market there have been few opportunities for several months.

Times appear to be changing a bit. I have kept my fingers on the pulse of the market daily and am beginning to feel optimistic about premium selling opportunities for the first time in many many months.

EWZ and FXE are both showing great potential with IV spiking significantly in the past week. I’m ready to pull the trigger on them, likely tomorrow.

TLT has some potential with IV Percentile just above 50. It’s nowhere near as attractive as EWZ and FXE, but I may sell some Calls considering my bearish bias at these levels.

YHOO IV continues to hold strong. I am currently in a bearish jade lizard, but have room for more size in YHOO. I may add, but sticking with my current position for now as the Alibaba headline risk does scare me a bit.

INTC is on my radar and I’m very close to a play in there.

To sum it up, there are several names that are interesting or close to interesting. Options Strategy Alerts members should expect a nice uptick in entry activity this week and next.

Here’s a look at a few different volatility measurements. Click each and read the short caption associated with the image to view my thoughts. The gray ranges represent where I’ll be willing to increase capital exposure in my credit strategies.

Is Volatility Back From Its Vacation?

It has been a terribly boring few months for premium sellers like me. Limited opportunity led to very little usage of available capital (net liquidity). There have been a few trades here and there, but most felt forced and most resulted in a small capital loss.

On Tuesday I put on the first trade that I have felt good about in a while. It was a credit spread in IWM. Kept size small since the implied volatility in IWM is below my typical criteria metric, but the trade looks good so I put it on.

I am getting the feeling that I’ll be back in the game in a big way very soon. With Tuesday’s down move, yesterday’s slight recovery, and today’s huge bear gap open I think we’re onto something. Couple that with VVIX showing strength on down VIX days a few times recently (possibly indicating Trader’s are expecting the VIX to pop soon) and major relative strength in RVX which the other volatility indexes may catch up to, and there may be some bumpy roads ahead.

For the sake of my engagement and earnings potential in 2014, I sure hope all the signs I’m seeing and my gut feeling are correct.

Here’s to volatility! I sure would love to see you come back, you’ve been on vacation long enough!

How I would deploy & allocate $100,000 with standard margin using Options only.

Cross Referencing IV Percentile (aka IV Rank) with an Implied Volatility Chart

Strong performance so far in 2014 for our Options Strategy Alerts System. 87.5% win ratio!

Strong performance so far in 2014 for our Options Strategy Alerts System. 87.5% win ratio!

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Sunday’s 60 minutes piece about the stock market being “rigged” was a travesty. It might as well have been a 20 minute infomercial for Lewis’s book and a startup stock exchange. You know it’s shoddy journalism when you don’t even get ONE quote from anyone on the other side.

So here is the…

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