The play is with put options going long versus shorting the stock. Using these options we get much better leverage on the same downside move than just shorting the stock. This way we can take advantage of individual legs lower in a stock’s decline, limiting our time exposure in the market and leverage our returns […]
We have a few main rules in our trading and investing. First, take what the market gives; don’t try to make things happen that are not there, don’t try to fight the market. If it is giving you upside, take it. Second, follow the leaders. Figure out where the money is going (the market tells […]
Appreciate you becoming a member of the Daily. Below are explanations of why and when we entered or did not enter the specific plays in your email and then a more general explanation of entering the plays on the report. Please keep in mind that whether we enter or not is based upon our traders […]
With respect to large option spreads we note in the nightly report and in the alert if it is a spread that is too wide to realistically make money on. That is usually because of poor liquidity and thus the market maker plays with the spread to insure his book. When that happens we typically […]
There are many stop losses of late for obvious reasons as the market turned choppy as the nearer term trend broke and the breakout tries from the inverted head and shoulders could not hold. We like to keep playing setups that show themselves even at those times because the market can continue on and if […]
First off, your questions make perfect sense. While we always love an ideal entry with the volume and price targets matching up, that is rarely the case. So what are we left with? Making the best of what we get. This is especially true considering the market we are dealing with right now. Gone (at […]
We mentioned the January effect in the December 22nd report as a positive sign resulting from the action of many stocks we have seen of late (stocks making strong moves off of the bottom of their bases and currently forming the right sides to these bases). The January effect refers to the general tendency of […]
The market maker received a substantial material benefit. He bought at an artificially low price and most likely unloaded it right afterwards or a day or so later. This is a major problem with stop losses, particularly with options, simply because it is very hard to monitor. In theory your stop order is not supposed […]
A test of the breakout often occurs after a stock breaks out of a consolidation or base and moves higher: once the initial move higher peaks, the stock “takes a rest” ideally by coming back to test some short term support such as the 10 or 18 day exponential moving average (this “rest” is actually […]
The Phillips Curve is an economic theory that is avidly followed by some and equally disdained by others. Basically it is the ‘speed limit’ theory describing economic activity in relation to inflation. In general, the ‘Curvers’ believe that there is a limit to the level of growth that can be sustained without inflation. Too much […]
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