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Andrew Crowder
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Over the last few years I have worked diligently towards refining several of my favorite and most successful stock options strategies. My hard work and diligence have proven to be a success and now I want to share my ideas and strategies with a limited group of like-minded investors. My options... More
My company:
CrowderOptions.com
My blog:
Crowder Options
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  • Has The Reversal Started?

    Important Note to Subscribers: Before I begin I wanted to remind those of you with SPY positions that ex-dividend is on Friday the 15th. It is imperative that if you have any ITM strikes you must take off that position unless you want to be on the hook for the dividend. I will be sending out a trade alert Thursday (possibly tomorrow if SPY moves lower) to remind my subscribers to take the appropriate steps if they indeed have any ITM strikes.

    The S&P 500 finally took a reprieve today after seven straight days of gains. SPY traded as low as $155.22, but finished the day back up towards the $155.70 level…indeed frustrating for those of us with bear call spreads.

    But again, it's all about staying the course. And given the current overbought state of most of the highly-liquid ETFs I follow, the pot odds favor the bears. Bear call spreads are the appropriate options strategy in this case, although the low implied volatility makes it rather difficult to sell out-of-the-money credit spreads for decent premium. Just a reminder, all things being equal, the better the premium the larger the margin for error.

    For all you newbies an 80-85% chance of success on a credit spread has a larger margin when implied volatility is higher. Given that the VIX is near all-time lows, you can quickly see how the margin of error is less than normal even though the probability of success is the exact same.

    OVer the next few days I will be looking at several ETFs that are currently in a very overbought state for possible trades in both of my options strategies. Subscribers stay tuned!

    If you haven't, join my Twitter feed or Facebook.

    If you are a believer in a statistical approach towards investing please do not hesitate to try one of my options strategies. I use simple mean-reversion coupled with probabilities for each and every trade. Give it a try, it's free for 30 days.

    Disclosure: I am short SPY, DIA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

    Mar 13 9:42 AM | Link | 1 Comment
  • Bulls Beware…Major Indices At Historic Extremes

    Yes, the market has rallied in the face of, well, almost everything.

    While I have my doubts about the sustainability of the current rally I'm not going to give you the reasons why…because it's only my opinion and as we all know when using a statistical approach towards investing/trading opinions are essentially useless.

    The Russell 2000 (NYSEARCA:IWM), S&P 500 (NYSEARCA:SPY) and Dow (NYSEARCA:DIA) have recently pushed to all-time highs which has pushed our High-Probability, Mean Reversion indicators to extreme overbought states.

    Moreover, if you look at the RSI over various time frames you will quickly notice that most of the ETFs I follow are pegged right now. Typically, when this time of reading occur we see a decent decline short-term decline going forward.

    But there's something different this time around. First of all we have the VIX near historical lows. Will we see single digits in the investor's fear gauge? Secondly, the longer-term picture, at least from a mean-reversion perspective looks ominous for the bulls.

    Just look at the RSI (14) on a five year chart for the S&P 500.

    As you can see the indicator has pushed into an overbought state for only the second time in the last five years…and the last time was in early 2011 when SPY fell from $130 to $110.

    It's been a rough few months for those of us who sell credit spreads for a living. But, when you make 80-85% trades every expiration cycle you should expect to see a few losers in the mix. I currently have a few credit spreads that are not going my way, but given the short-term extremes I am still confident in positions with the exception of a fairly aggressive (68% chance of success) trade I made in the Theta Driver strategy.

    Of course, only time will tell, but by the looks of it the bulls should be running out of steam very soon. Typically expiration week sides with the bulls. We have seen this over the past year with 9 out of 12 expiration weeks reaping higher returns, but we haven't seen the market in such a precarious overbought state.

    Situations like what we are seeing in the market are what I thrive on as a statistically-based trader. I use only highly-liquid ETFs to take advantage of short to intermediate-term extremes in the market and pounce on those opportunities using statistically-based, high-probability trades. My strategy of choice of course is credit spreads, Verticals, condors, etc. you name it, I sell it. I always want to take the other side of a highly-speculative trade and in this environment speculation has become robust. Now its time to take advantage of those options buyers who are taking 15% chances on a trade. Let me have the other side and the 85% chance of success to go along with it. I will win out every time over the long run. It's just a matter of staying the course and keeping position-sizes within a reasonable level. The latter is by far the most important factor in the longevity of a trader.

    Disclosure: I am short SPY, DIA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

    Mar 13 8:56 AM | Link | Comment!
  • Options Strategies Now Open

    I just wanted to let all of you know that I will be opening up my strategies to everyone tomorrow. So far the response has been overwhelming and I appreciate all of the interest in my statistically-based approach. As I have stated before, I will be limiting my subscriptions to keep the service manageable. If you are interested please sign-up within the next 24 hours.

    Again, I only have a few spots left and will be opening up the strategies to the public to fill the remaining spots tomorrow.

    Sign-Up Today!!!

    The Statistical Truth

    I hate to say this about some of my fellow options traders, but I can't tell you how much I abhor those in the industry (you know who you are) that absolutely ruin the true benefits of options for the self-directed investor. Claims of outlandish 300%, 400%, 1200% in just a few days. Encouraging the use of low-probability out-of-the-money puts as a predominant strategy without the mention of selling premium.

    It's frustrating. It's frustrating to see so many so-called gurus with no real-world experience act as options traders when their services fail time and time again. Again frustrating.

    For some reason investors don't crave what's truly important, realistic strategies with realistic gains. Transparency. Knowing that trading isn't easy and is a life-long endeavor and that while the journey may be bumpy at times over the long haul it is worth all of the effort. A long-term approach to short-intermediate-term trading with high-probability trades as its foundation. Selling credit at every extreme. Always talking about the importance of position-sizing. Always considering risk-management.

    Why would people rather join services that tout such outlandish claims? It is beyond me. Are self-directed investors really that gullible? Why do they continue to fight statistics?

    It is my hope that I have carved and will continue to carve a slice of decency and transparency into the options world. I am certainly not perfect, but I know that selling options is a valuable strategy with an overwhelming statistical advantage. And it is my goal to teach as many self-directed investors as I can about the benefits they offer.

    Tags: options
    Jan 22 12:31 AM | Link | Comment!
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