Trade Ideas

As most of you know, I am a very active (often directional) trader who often has between 15 and 30 positions on at one time, but I believe my trades make money because of time decay and not because of my personal directional biases. However, I have never really given any specific trading ideas. So, I am doing this new thing where I will give out a top trade idea. These trades will also cover a large number of stocks, futures, Forex, and bond products. I am agnostic to trading products for the most part so I will have a large mix.

Today (premium play):

Since this is a trade that I don't have a particular opinion in, but I still wanted to do a skewed iron condor I gave it skew to the upside. The trade has a $33 dollar risk to the upside,  a $133 dollar risk to the downside, and a max profit of $67 giving it a 66.5% chance of making money. The vol in the product is also pretty decent trading around the 62% percentile in its one year range (it is best to do iron condors into high vol because of the premium). I prefer skewed condors because it decreases risk to one side if the markets fall to far and since there is a 16.75% chance that either side of the condor is in the money by expiration you might as well decrease risk on one side because between that 33.5% chance of not being profitable you have a 50/50 chance of being on one side or the other, so lets reduces the risk on one side (if you did a normal iron condor the risk is the same on both sides). The only bad thing about the skewed is your sweet spot (area of max profit) can tend to be a little smaller.

Danger In the Water...........

There is danger in the water. The S&P is trading at 1699.25 and the Dow is at 15,477. There is lots of complacency in the market right now but do not discount this. As we have learned from all year complacency can be very dangerous on both sides of the market. So, at this point it is dangerous on each side of the market as in the market is very high again; however, there is absolutely no fear. Hence I am long invid stocks (that I prefer) and short indexes. I covered some short stock in SPY (that was a hedge) and I am once again long delta. However, please be on the lookout for toppy action. I don't like indexes here because some long vol trades look appealing. Bonds I still think are a short (rising interest rates), gold is looking to be more of a long as it seems to have lost it's steam to the downside. I am also long a little yen mostly because of the impl volatility situation and I think the situation in japan is likely to get worse (for stocks). I also have a few skewed iron condors in HPQ and EWW. Most of my positions,again, are directional because of the low vol. So my main positions delta wise are long MSFT, Long AAPL, Long JCP, Long FB (getting rid of soon),Short Bonds,Long NEM, Long GLD, Long SLW, Short SPY, Short QQQ (getting rid of), Short IWM (getting rid of), and selling a put spread in GOOG. I want to make this clear though. I much prefer trading indexes versus individual stocks. Stocks come with large binary event risk versus indexes; however, invid stocks often have higher implied volatility. I usually play macro trades, but right now I have a lot of stocks in as premium plays.

The Markets are "Randomly Predictable": Volatility percentile add in study1) Start...

The Markets are "Randomly Predictable": Volatility percentile add in study


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1) Start...: Volatility percentile add in study 1) Start with eyedropper icon located in the upper right first icon of the chart screen.  ...

A Few Different Trades than Usual

I actually have been doing a few things that I haven't usually done in the past six months. I have traded naked stock (EWC and DBA), I traded AAPL (Apple Computer), and I got long some SPU's. First of all, I rarely trade stock by itself. I usually prefer to have several different options or offsetting positions such as stock pairs  involved . Next, I rarely trade AAPL. In the past several months AAPL hasn't been that interesting. It had low vol and ranging action which stinks. However, AAPL just fell down on that Iphone news, so I couldn't resist selling some premium. However, the volatility in it stinks right now I still couldn't resist. And then, I got long S&P's. I haven't done that in a while! However, I primarily did it through selling Vol as the VIX is now grinding lower again. So, I think at this point it is likely to keep falling just from the current market conditions. At the current time, the S&P keeps blasting upward and all fear has gone away. This is scaring me on the short side, so I am selling vol, trading a lot, and staying as mechanical as possible. As for my other general positions, I have short delta in oil, long delta in the yen, short bonds, long a little emerging markets, short vol in Mexico (EWW iron condor, long delta in individual stocks with high vol percentile (BBRY, XLU, JCP, EEM). I also have a wide butterfly in XLE which will be a position that will sit until very close to expiration. Another iron condor was in HPQ when the vol was a little higher, but right now I am just sitting and waiting in there. As for the major market opinions I have I think oil is over extended because the "war risk" isn't that great, gold/silver/miners might be some good longs as we have seen gold fall, I , and bonds are still crappy as we continue to see interest rates rise and more people liquidating.

Global Opportunity

I am seeing lots of opportunity on the global scale. Right now my positions are short "risk off assets" and long a lot of "risk on assets". As in I am short lots of commodities as in agriculture, bonds, natural gas, gold, silver, and the outlier is short oil. I am also short stock indexes, but I am long mostly stocks. As we see interest rates continue to rise it should continue to have a bad effect on these risk off markets especially as money is still flowing out of them. Today was also a key day as the short term sentiment flipped back to bullish and the bears are back in hiding. However, I am also long VIX as I still think volatility has room to expand. As for my global stock market positions I have some shorts in Canada (one of the two positions I have not using options), and I have several Latin America longs. So, right now I am looking for theta decay, and I am hoping to find some crappy stocks I can find some trading interest in on the short side. The only currency position I have is the euro. I think it was a interesting dip to buy on good sentiment in the area. My personal favorite trade right now is short puts in MSFT or short wide verticals. I will be adding some risk in MSFT along with some short delta in the Russel and NASDAQ.

Interesting and Healthy Action

We have been seeing some really healthy action for traders of late. We have had two down moves in 2 months, higher vix, and lots of opportunity. I have been trading a huge amount with lots of positions, short delta, and good profits. I have sold lots of premium, shorted the markets, and I have gotten paid for it. However, what you guys don't read is how flexible I am with my positions and all the little trades that are done in between. However, as for a general opinion on the markets I like short S&P's on any rally, short premium in individual stocks, a mix of bearish and bullish delta positions in stock sectors, short bonds on every rally, short euro on every rally, long yen, long dollar, short oil, and short metals. As you have probably noticed there are a lot of shorts in there, but the long delta in my stock positions hedge stuff out, and they also generate good theta decay. So. my positions basically follow those opinions, and I am not going to get into those in depth. However, I will say that the S&P 500 has some way to fall as long as fear keeps coming into the market from news and volatility not pulling back much . So, again short the market on any rally, but I will be careful depending on the market moves. As for bonds, interest rates should continue to rise as fear rises and QE has less and less of an effect. The basic idea is the world is long bonds, but bonds have gone down and now everybody is trapped. Also, if you would think stocks should go up for this this will probably not be the case because the traders and investors in bond positions are probably a little shell shocked and unlikely to take much risk.So, obviously the buyers of stocks are in the stock market, but if we continue to fall it will be nasty.