Options Trading

Option spreads can be used in a number of ways, its definition is simply taking opposite positions in terms of buying different strike prices on the same or different expiry dates for the same traded underlying financial instrument, thus creating a spread of positions as part of a single strategy.

Todays events:ADP national employment report, Chicago PMI, Factory orders.

FOMC minutes suggest that further action at September 20-21 meeting
discussed a new form of QE3 easing, ranging from asset purchases, increasing the average maturity of the Fed’s portfolio.
Consumer Confidence - S&P downgrade drove down consumer confidence that fell  14.7 points in August to 44.5.  VIX cash gaiend $0.61 to $32.89, VIX futures still  implying a volatile market, but we are starting to see a change in the curve and gradually getting its original slope.  
The "UpDown" signals are an outcome of calculated calls and puts implied volatility.  Positive numbers yielded from higher calls IV, means  traders believe that the stock will rise and are willing to pay more for the calls, the opposite goes for the puts.

Todays events: Case-Shiller 20-city Index, Consumer Confidence ..

Yesterday markets performed a huge move on a slender volume, probably, leaving major traders on the bench.   The S&P rallied 2.8%, and the Nasdaq was up by 3.3%. It may be that bulls are anxious to get long on sporadic publications of  U.S. Stocks are, "Massively Undervalued"  and "Gold Gets Bubbly."  One more reason could be that all the world’s central banks are now providing easy money putting the rising inflation worries aside. VIX cash continued to drop this time by  $3.31 to $32.28, VIX futures still  implying a volatile market, but we are starting to see a change in the curve and gradually getting its original slope.  
The "UpDown" signals are an outcome of calculated calls and puts implied volatility.  Positive numbers yielded from higher calls IV, means  traders believe that the stock will rise and are willing to pay more for the calls, the opposite goes for the puts.

Today's main event :Standard & Poor's president Deven Sharma resigns... 
Standard & Poor's president Deven Sharma steps down followed by the credit rating agency's decision to historically downgrade US debtis.
Economic event : New Home Sales For July will be published at 10:00 AM , Prior - 312K , Market Expects 300K.  This event will take second roll today.   VIX cash did not move much, down by $0.61 to 42.44, VIX futures still  implying a volatile market this time it looks like to the upside.   The "UpDown" signals are an outcome of calculated calls and puts implied volatility.Positive numbers higher calls IV traders believe that the stock will rise and are willing to pay more for the calls, the opposite goes for the puts.

Today  on the board: QE3 ... 
Record-low yields on U.S. Treasuries shows that institutions already priced the third quantitative ease .     VIX cash didn't move as much, up $0.38 to $43.05, maybe waiting for the Federal Reserve Chairman Ben S. Bernanke statement.  VIX futures still  implying a volatile market.   The "UpDown" signals are an outcome of calculated calls and puts implied volatility.Positive numbers higher calls IV traders believe that the stock will rise and are willing to pay more for the calls, the opposite goes for the puts.

Today's economic event :PPI, Core PPI...

VIX cash gained $0.98 to $32.85.  VIX futures still trades abnormally of it's "NORMAL" term structure, still implying higher volatility. Combining global market probability is more than 50% to the downside.
Our vision is, side ways to down market for the next 6 mo.
The "UpDown" signals are an outcome of calculated calls and puts implied volatility.Positive numbers higher calls IV traders believe that the stock will rise and are willing to pay more for the calls, the opposite goes for the puts.

Friday's economic event : Retail Sales ex-auto...

Retail ex-auto came up positive and better than expected. VIX cash droped by $2.64 to $36.36.  Calculated derivatives (Volume and prices look at the table below) and VIX futures trem structure trades the opposite of it's "NORMAL" structure, still implying high volatility.   Option traders would likely trade straddles to scalp markets volatility.
The "UpDown" signals are an outcome of calculated calls and puts implied volatility.Positive numbers higher calls IV traders believe that the stock will rise and are willing to pay more for the calls, the opposite goes for the puts.

Today on the board : Wholesale Inventories...

Yesterday, as presumed we had some rest of this current turmoil.  Today waiting for wholesale inventories at 10:15AM maight unveil some supportive leads about our fragile economy. VIX calculated derivatives (Volume and prices look at the table below) retreated from all time high and we are starting to see maybe a turning point.

The "UpDown" signals are an outcome of calculated calls and puts implied volatility.Positive numbers higher calls IV traders believe that the stock will rise and are willing to pay more for the calls, the opposite goes for the puts.

Market Sentiment

Durable orders report shows a weakening economy but if we exclude the transportation sector that declined in nondefense aircraft orders, every remaining sector showed substantial growth. In total, durable orders excluding transportation indicate substantial 0.6% growth.
New home sales 288,000 in August same as July these numbers could be false, because of statistical manipulations.
All in all, yet, there is no certainty to both directions of the economy, neither a double dip recession nor sound growth, and that for itself are good news.

Market Sentiment

On the news today: Consumer sentiment commentary: This Sentiment is reflected by well known factors such as unemployment rates and gas prices. It relays on a simple psychological sentiment and does not correlate statistically with consumer spending, therefore it has little analysis value to understand the broad economy's direction.  At 10:00AM EDT is the Consumer Confidence Index will be announced, on August it was 53.5 higher than July 51.2. Market analysis estimates are a possibility of a double-dip recession and the Index will pull back to 50.0.  Most of the impact on the consumer confidence comes from a weakening in the labor market, as we recall the labor index decreased from -40.7 to -41.9.

Market Sentiment

July's existing home Sales fell to 3.83 million homes. Their worst level since records began in 1999. Market sentiment comprehends that the bottom in housing future prices is gloomy. On the other hand, a growth in the pending home sales index is giving some hope that sales may increase in August. Initial Claims dropped to the 450,000 for the past few weeks.
Total unemployment numbers are still are in its highest level.

Source:  Department of Labor.

Sentiment

Stocks are broadly higher after upbeat by the National Bureau of Economic Research that said on Monday "the recession that has began in December 2007 officially ended in June 2009".
The retail sector shows stronger-than-expected sales a push up for Q3 GDP and gains in the wholesale Inventories and net exports also drives Q3 GDP Higher.
Housing Starts - market expectations are slightly better in July.

When you wake up in the morning, do you know what the weather will be like today? Will it be sunny or will it rain? Just by walking outside, you would have a hard time making a prediction. This is because when you stand on the ground you cannot see beyond the horizon. You cannot see into the future. The sky may be blue where you are, but just over the horizon there may be a big thunderstorm headed your way. How can you decide if you should plan your outdoor picnic for later in the day?

Many complex factors influence the value of an option, including the price of the asset today and its price history in the past. Then, of course, there’s the future—whether the stock will rise or fall in price.
How can a beginner learn how to trade options without risking huge amounts of money?

The Ratio Spread, is a vertical type spread used in trend-less market periods, it’s a simple strategy. In the case of Call Ratio Spreads it involves the buying of one ITM Call option and the writing  .... read more

Diagonal option spreads is yet another kind of option trading strategy, that aims to shift the odds more in our favour. Generally diagonal spreads can have a better risk / reward ratio than any other strategy. Particularly in cases where you consider writing naked options, it might be possible to replace the whole naked option writing idea with a safer diagonal spread.......read more

Options’ trading offers the opportunity to investors, to fully protect their long stock portfolio, using what is known as a Costless-Collar strategy. The idea is to provide hedging on the long stock held, without paying a net premium for it!.....   read more

Most short term stock traders, from day-traders to swing traders are completely unaware of a tendency that exists in the US markets, that is a tendency to close up or down depending on what day of the week it is! Believe it or not, the day of the week, has been statistically tested, and back-tested over 20years, the results are conclusive that the pattern does exist!.....   read more