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During today's trades review (in the video above), I discussed how I'm still of the mind to be hunting for opportunities to be bullishly aggressive.
However, the current volatility environment is also offering us spots to add some delta-neutral credit spreads with better-than-average odds of success. I like doing this, if for no other reason than to add some portfolio diversification.
And I demonstrate one way in which I manage open call calendar spreads to manage my risks and give me a better shot at large gains.
All this and the usual stop updates for existing positions.
We've seen a bit of a rise in volatility this week, and while it is not something that should be ignored or scoffed at, I do think it offers us options traders an opportunity to position for some volatility mean-reversion, especially in some big-cap names that are stuck in ranges, ideally tightening ones.
Today's trade is in a well-known name that already has earnings out of the way and fits the bill for some continued sideways action.
On today's Flow Show, Steve Strazza and I discuss this morning's frustrating start to Q4, and whether or not it means anything.
A 20%+ rise in $VIX is not something that should be ignored. But is the market overreacting to today's down tape and is this just related to repositioning in a new month and quarter?
Regardless, we've got a stock on our radar today that is caught up a bit in the news cycle, has a lot of traders caught in short positions, and could be ripe for an epic squeeze if the stock can get out from under a declining Anchored VWAP.
Here's a chart of ZIM Integrated Shipping Services:
Today, I fielded a question from a trader who has a winning options trade on.
When he originally put the trade on, he didn't have a stop-out price in mind. It was a bit of an "all-or-nothing" trade. His risk is defined and he was comfortable with the fact that if he lost, he would probably be a 100% loser. Nothing wrong with this, as long as the position sizing is right.
Fortunately for him, the trade has gone his way and he's sitting on some handsome profits, yet the stock still has work to do to get to his profit target.
His question to me, paraphrased, is:
"I didn't originally have a stop for this trade; but now that it's winning, how do I determine if/when I should apply a trailing stop to protect my open gains?"
I'll classify this as a "first-class" problem. His issue is, how does he give this position as much room as possible to continue growing, while ensuring he can still escape with a profit if/when the trend ends?
"We should be doing more in China." ~ JC Parets during this morning's internal Analyst meeting.
This, coupled with my feeling that we need to be more aggressive in the stock market right now as the potential profits on the upside could be quite meaningful, playing in China is as aggressive as it gets.
A few years back, Robinhood made a big splash in the retail trading world by offering Commission-Free options trading.
Retail traders and the media that served them rejoiced!
"This is a game-changer!" they shouted.
And in some ways it was. But not in the way you might think.
It changed the game for retail options brokers to be able to attract multitudes more sheep to get shorn. How?
For one thing, retail brokers are able to command top dollar from market-making firms who pay the brokers for the opportunity to take the other side of retail trades. This is called Payment for Order Flow (PFOF).
At Portfolio Accelerator today, Uber was a name that was getting everybody excited. It looks like it's setting up for another run to and through all-time highs.
