Markets change seasons like the weather; clearly we’re in a different type of market “character” than we were a year ago. And just like how you have to wear different clothing in the different seasons of weather (flip-flops in January is a risk), you need to be able to match your strategies to match the current Market.
So what is the weather like today in the Market? Even after dropping 100 points off of the recent highs on the S&P500, the character has not changed…yet. We’re still seeing “quiet/trending” behavior with relatively docile intraday volatility, and very low IMPLIED volatility. Because of this, we generally want to establish a LONG VEGA position. Is this a reference to a really bad Chevrolet from the 1970’s? Nope…”vega” means the sensitivity to changes in implied volatility. With implied volatility being low, the odds favor it RISING at some point, so we want to be trading positions that gain value if implied volatility rises. This is why we’re trading time spreads like Campaign Diagonals right now. In fact, we’ve been trading them since late August, and it’s been our simplest, most successful strategy in the live trading room since that point. The other thing that I like about them is the “don’t care” mentality towards day-to-day price movement. I really don’t care what happens overnight, because the position is self-hedged to a degree, whether the price goes up or down. So no more worrying about an overnight black swan event. Now certainly, if this little pullback turns into a bigger one and we see implied volatility spiking again, we’ll look to place SHORT VEGA trades like iron condors and credit spreads. Until that point, the weather is just fine for our campaign diagonals! Make sure that you’re adjusting your strategies to work with the current market. In your corner……..Doc Severson If you are interested in learning more about these strategies, Go LIVE with Doc every day trading them in the 12 Minute Trading Live Trading Room or Get the Campaign Cashflow Masterclass! The 2023 Year in Review Event was the best we've ever done. The engagement was fantastic with such great questions and comments, and we really hit the mark with what we shared on how to win and make money in 2024. Doc's strategy overview and breakdown was awesome!
We also announced multiple new Masterclasses, new strategies, and some very special offers including a Masterclass for FREE - but you will need to act quickly because it all goes away on Sunday, January 28th at Midnight! Here are answers the questions we received about the specials and offers at the event.
Have you heard of the term “Random Walk” as it relates to trading strategies?
The author Burton Malkiel wrote the book “A Random Walk Down Wall Street” in 1973, and has served to be kind of a bible to those in the investment community that believe that predicting forward price movement is impossible. This, of course, flies directly in the face of those that use technical charting studies to analyze price behavior and predict future movement. So you have two religious “camps” in the investing community:
Which camp do I ascribe to? Actually, both. I DO believe that price can do whatever it wants, WHENEVER it wants to. Actually predicting the forward movement of price action is a fool’s errand. But I also believe in the power of analyzing price movement and patterns, and some things repeat over and over again. Range Expansion leads to Range Contraction. Exhaustion leads to Consolidation. Those don’t change. Instead of forecasting future price movement, I will go so far as to give the benefit of the doubt to one direction or another. Strong convictions, loosely held. I use a somewhat hybrid approach that allows me to see and react to what’s actually happening, instead of forming a bias based on what I think SHOULD happen. The longer that I have been trading, the more that I admit to myself that I don’t know what’s going to happen in the next five minutes, let alone in the next month. That affords me a sort of freedom in a way, but only if I’m using a strategy designed to work with this “Random Walk” approach. In general, strategies designed to work with a Random Walk approach are generally better reward-to-risk, and exchange a decreased probability of success for better reward-to-risk. They also have more mechanical entry conditions, instead of waiting for a specific technical signal. Learning about and using them might make a difference in your trading. Ask us how you can get started. In your corner……..Doc Severson In the realm of options trading, selling covered calls stands out as a strategy that can potentially boost your income while holding onto stocks. Whether you're new to trading or looking for an additional income stream, let's break down the concept and explore some actionable steps to get started.
Understanding Covered Calls What Are Covered Calls? Covered calls involve selling call options on stocks you already own. This strategy is great for those who want to generate extra income while keeping their stock positions. Why Covered Calls?
Selecting the Right Stocks Choosing the right stocks is crucial for successful covered call strategies. Here are some recommended stocks, each priced under $15, that align well with covered call opportunities:
Step-by-Step Guide to Selling Covered Calls
Managing Your Covered Call Positions Once your covered call positions are in play, it's essential to manage them effectively:
Risks and Considerations While covered calls can be lucrative, it's crucial to be aware of potential risks:
Congratulations! You now have a simplified guide to start selling covered calls and potentially boost your income. Remember, like any investment strategy, it's important to stay informed, adapt as needed, and enjoy the potential benefits of this income-generating approach. Happy trading! Hey traders! Today, let's dive into the world of Iron Condor trading with a focus on those low-volatility stocks. If you're all about smart risk management and looking for a strategy that's both low on competition and high on probability, then selling Iron Condors on low-volatility stocks might just be your ticket to that sweet income stream.
Why Iron Condors Love Low Volatility Iron Condor trading really thrives in those calm, low-volatility market vibes. Forget the wild price swings – this strategy is all about navigating the smoother waters, minimizing those pesky risks that come with options trading. Picking the Right Low-Volatility Stocks So, how do you find the perfect match for your Iron Condor game? We're talking metrics here – historical volatility, beta, and other nifty indicators that give you the lowdown on a stock's stability. This is the nitty-gritty stuff that forms the backbone of a successful Iron Condor strategy. Top 5 Low-Volatility Stock Picks
Choosing wisely when it comes to low-volatility stocks is the secret sauce for Iron Condor success. The top five picks we've spilled the beans on offer the stability you crave and the potential for some predictability in those stock movements. As you journey into the world of Iron Condor trading amidst the tranquility of low-volatility environments, don't forget to do your own digging and keep an eye on what's shaking in the market. Happy trading! Trading in the financial markets always involves a degree of risk, and options trading is no exception. However, within the realm of options, some strategies are considered more conservative, offering a balance between risk and potential returns. Let's explore a few options trading strategies that are often deemed safer: 1. Covered Call Strategy Overview: In a covered call strategy, an investor owns the underlying stock and simultaneously sells a call option against it. Risk: This strategy carries limited risk, as the ownership of the stock provides a cushion against potential losses. However, profits are capped at the strike price of the call option. 2. Cash-Secured Put Overview: The cash-secured put involves selling a put option while having enough cash to cover the purchase of the underlying stock if the option is exercised. Risk: Risk is limited, as the strategy is cash-secured, and the investor is obligated to buy the stock at the strike price only if the put option is exercised. 3. Protective Put (Long Put) Overview: This strategy involves buying a put option to protect an existing long stock position. Risk: Risk is limited to the cost of the put option, which acts as insurance against a decline in the stock price. 4. Collar Strategy Overview: The collar strategy combines the purchase of a protective put with the sale of a covered call. Risk: Risk on the downside is limited due to the protective put, but potential gains are also capped by the covered call. 5. Iron Condor Overview: In an iron condor, an investor sells both an out-of-the-money put and an out-of-the-money call, while buying a further out-of-the-money put and call for protection. Risk: Risk is limited due to the defined maximum loss, but profit potential is also constrained. 6. Credit Spreads (Bull Put Spread/Bear Call Spread) Overview: Credit spreads involve selling one option and buying another option with the same expiration date but a different strike price. Risk: Risk is limited due to the spread structure, but profit potential is also limited. Exclusive Offer from 12 Minute Trading: Unlock Your Trading Potential! Are you ready to elevate your trading game? Explore these safer options trading strategies with 12 Minute Trading. Download our free e-book, "The 5 Key Elements of a Winning Trading Strategy," and discover essential insights to enhance your trading approach. Get Your Free E-book Now While these strategies offer a more conservative approach to options trading, it's crucial to understand that they come with limited profit potential. Traders should carefully assess their risk tolerance, market outlook, and financial goals before implementing any strategy. Moreover, gaining a solid understanding of options mechanics and market dynamics is essential. For those new to options trading, seeking advice from a financial professional is highly recommended. Remember, no strategy can eliminate all risks, and markets can be unpredictable. It's essential to stay informed, continuously learn, and adapt your approach based on market conditions. Happy trading! After being in the trading space for the past twenty years, I almost got scammed out of the assets in one of my accounts last night.
It started with a phone call from a number that I didn’t recognize; most of the time I just let these roll to voice mail as they are 99% telemarketers…but for some reason I answered it. “Hello, this is Josh from xxxx exchange, we’ve seen some login attempts that don’t fit your normal pattern. Have you logged in recently from London? “We sent you an email earlier today warning you about this potentially malicious login attempt, and haven’t heard from you so I’m calling tonight.” “Would you like me to lock out your account for 24 hours?” At this point my radar was not going off yet because this is exactly the type of phone call that I get from banks if there is a bogus transaction that hits the wire. I honestly thought that he was relaying along important information and I was concerned that someone had gotten into my trading account. I did not see Josh’s email because it ended up in my spam folder. (Clue number one!) When I checked the “from” address, I saw that it was from a .co domain extension, and not a .com extension. Again, this was odd but still not a major red flag. At this point I told Josh, “OK, before I go ahead with this I need to know that you are who you say you are, so I know that you’re not trying to socially engineer me.” Something was starting to smell off since he kept rushing through his responses and I had to ask him to slow down several times when asked for his name and the ticket number with the exchange. The final flag for me was when I hovered my mouse over a link in his email and it was going to send me to a strange-looking destination. Uh-oh. “Hey Josh, I’m not going to click on that link as I’m not sure where you are directing me.” <click> Josh hung up. Phew. I almost gave away the keys to the castle. I have no idea how my phone number and email address was compromised via this exchange. I immediately changed my password just to be sure, and will likely change my email address associated with this account. The Bottom Line This type of scenario is evidently a very big problem with online exchanges; a wily scammer can talk their way into a back door into your account, lock you out, and then transfer funds before you can do anything. From what I have heard, no exchange will reach out to you with this type of information; we are used to this with banks. Instead, they will text or email you and then YOU have to call back into the exchange/broker to authorize a security action. In your corner……..Doc Severson For a FREE 2 Week Trial of Doc's Daily Income Service, click here |
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