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Price Headley, CFA
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Price Headley was inducted into the Traders' Hall of Fame in 2007 and is the founder of BigTrends.com, which provides investors with specific real-time stock and options strategies and investment education to profit from significant market trends. Price appears regularly on CNBC, Fox News, and... More
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Big Trends in Trading: Strategies to Master Major Market Moves
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  • 2013 Preakness Handicapping, Analysis & Picks From BigTrends.com

    This Saturday is the Preakness at the Pimlico race track in Maryland, the 2nd leg of Horse Racing's Triple Crown. Orb took home the Kentucky Derby on a sloppy track. A big longshot, Golden Soul at 32-1, came in 2nd in the Derby, which messed up our projections a bit … as did the performance uncertainty of young horses on that muddy wet day - but still Price did have 2 of the Top 4 finishers, while Moby had 3 of the Top 4.

    Currently, the weather projection for Baltimore on Saturday at race time is around a 50% chance of rain showers - hopefully it shouldn't be a major impact.

    Here are our Preakness picks:

    Price Headley, President & Founder of BigTrends.com and long association with the horse business:

    Orb (Post Position 1) could well be the first Triple Crown winner in 35 years here especially in a fairly non-descript batch of 3 year olds this season. However, at even money, I think you have to wonder if perhaps he may not like the tighter turns at Pimlico and would prefer the extra distance at the Belmont in 3 more weeks. So if there's a race to play against him, this is it But I'll still include him in exotic boxes, and hope that the longer odds horses manage to get up for a better pay day.

    MyLute (PP 5: 5-to-1) has shown some powerful speed ratings in his past 2 races and while 5th in the Derby was only beaten less than 4 total lengths in a sloppy track. On a fast surface at Pimlico he could prosper, especially under the guiding hands of jockey Rosie Napravnik. Rosie knows Pimlico well, having been a leading rider there. Should be coming on strong at the wire.

    Will Take Charge (PP 7: 12-1) was way wide and had to check meaning he lost a lot of ground in the Derby. I think under jockey Mike Smith, he can get a piece of the exotics. A wildcard, but probably the best value bet in the race.

    Departing (PP 4: 6-1) is a winner in 4 of his 5 starts, and should also like the fast track. Has a good closing kick so expect him to get up for a piece of the action as well.

    Bets to consider:

    $20 win on #5
    $10 win on #7
    $4 Exacta Box on 1,5,7
    $2 Trifecta Box on 1,4,5,7

    Moby Waller, Portfolio Manager at BigTrends.com and former CBOE Market Maker:

    Orb seemed one of the 2 or 3 best horses going into the Derby, and he basically proved it convincingly in the Derby. The Preakness is the shortest race of the Triple Crown and normally is won by the best horses that can get to the front or stay near/a bit off the pace - the Derby and upcoming Belmont can provide more surprises and often better wagering opportunities than the Preakness.

    We've seen many horses win the first 2 legs of the Triple Crown in the last 35 years since Affirmed was the last winner in 1978, and I think Orb will continue that trend in the Preakness. Also note that at least 1 "fresh" horse (one who didn't run in the Derby) has finished in the Top 3 in the Preakness consistently in recent years.

    The battle is for 2nd, 3rd and 4th in my view - and as a likely even-money (or less) favorite, if Orb does come out on top the parimutual payouts won't be huge (especially when compared to the Derby). The likeliest longshot that can hit the board is Govenor Charlie in my analysis.

    Here is my Top 4:

    1st Orb (Post Position 1, 1-1 Morning Line Odds)
    2nd Departing (PP 4, 6-1)
    3rd Govenor Charlie (PP 8, 12-1)
    4th MyLute (PP 5, 5-1)

    Theoretical Bets:

    $2 Exacta Box (1,4,5,8) = $24
    $1 Trifecta Box (1,4,5,8) = $24
    $10 Win/Place/Show on #8 = $30

    Best of luck and enjoy the weekend!

    BigTrends.com
    1-800-244-8736

    May 17 10:22 AM | Link | Comment!
  • 2013 Kentucky Derby Handicapping Analysis Picks From BigTrends.com

    It's time for our annual KY Derby selections and commentary. Last year we were pretty dead on, hitting many horses that finished in-the-money in the Triple Crown Races (especially Price's picks).

    First, we'll start off with an updated table of past Derby winners, their speed ratings and final tune-up race. Our analysis of past data indicates that horses with strong 100+ speed ratings in prep races have a better probability of winning the big race.

    Derby WinnerBRIS Speed RatingLast race (# weeks before Derby)
    I'LL HAVE ANOTHER95, 102Santa Anita Derby (4 weeks)
    ANIMAL KINGDOM100, 89Turfway Spiral (5 weeks, poly)
    SUPER SAVER92, 94Arkansas Derby (3 weeks)
    MINE THAT BIRD96, 98Sunland Derby (5 weeks)
    BIG BROWN106, 104Florida Derby (5 weeks)
    STREET SENSE98, 101Bluegrass Stakes (3 weeks, poly)
    BARBARO104, 104, 97, 97Florida Derby (5 weeks)
    GIACOMO100, 96, 98, 96Santa Anita Derby (4 weeks)
    SMARTY JONES105, 109, 101, 103Arkansas Derby (3 weeks)
    FUNNY CIDE111, 103, 97Wood Memorial (3 weeks)
    WAR EMBLEM109, 105, 88, 94Illinois Derby (4 weeks)
    MONARCHOS108, 108, 106, 98Wood Memorial (3 weeks)
    FUSAICHI PEGASUS110, 103, 100, 98Wood Memorial (3 weeks)
    CHARISMATIC104, 94, 94, 94Lexington (2 weeks)
    REAL QUIET107, 103, 73Santa Anita Derby (4 weeks)
    SILVER CHARM102, 98, 105Santa Anita Derby (4 weeks)
    GRINDSTONE101, 102, 93Arkansas Derby (3 weeks)
    THUNDER GULCH98, 103, 106Blue Grass (3 weeks)
    GO FOR GIN104, 105, 99, 100Wood Memorial (3 weeks)
    SEA HERO96, 85, 77Blue Grass (3 weeks)
    LIL E. TEE102, 96, 107, 100Arkansas Derby (2 weeks)
    STRIKE THE GOLD109, 100, 99, 87Blue Grass (3 weeks)
    UNBRIDLED108, 101, 104, 98Blue Grass (3 weeks)

    Price Headley, CEO of BigTrends.com:

    The big wild card in the 2013 Run for the Roses will be the weather, as forecasts show an 80% chance of rain on Saturday in Louisville.
    If it is muddy on the track I like to put a little back up money on the long shots of 33-1 or higher, which can save the day if the wet track muddies the current form.

    My favorite in this year's race is Verrazano (Post Position 14, 4-1 odds). He's the second choice behind new darling Orb, but I like Verrazano's consistency, as he is the only horse with not just 2 but 3 straight speed ratings over 100. So I will key most of my bets around him.

    The Derby usually favors closers and horses that want the extra ground. On that note here's my top challengers to Verrazano:

    Normandy Invasion (PP 5, 12-1): Closing fast on Verrazano at the end of the Wood Memorial, he has also posted impressive workouts lately. The profile reminds me of the similar setup when I picked Funny Cide to win the Derby. Must use this one for exotics and saver win bets.

    Revolutionary (PP 3. 10-1): Responded gamely to come back to win the Louisiana Derby. I like his heart.

    Vyjack (PP 20, 15-1): It's hard to look past an undefeated colt with good speed. Breaking from the far outside is not harmful in a large field, the question is if he has staying power.

    So my theoretical bets on a sample $100 model portfolio look like this:

    $20 Win on 14
    $10 Win on 5
    $5 Exacta box 5,14
    $5 Exacta box 14,20
    $5 Exacta box 3,14
    $1 Trifecta 14 with 5 with ALL
    $1 Trifecta 5 with 14 with ALL

    Moby Waller, Portfolio Manager & Analyst:

    The 3 year old horses in this race haven't gone such a long distance before with such a large field. With the expected rain, it will be the tough horses with heart that will emerge - those that can run off the pace and/or closers. Therefore, I threw out what looks like the speed horses that are likely to fade late or get swallowed up by the pack - one of those wire-to-wire horses may end up proving it can run off the pace, but I'd rather select ones that have already proven they can.

    Here's my projected Top 4 finishers:

    Revolutionary (PP 3, 10-1)
    Java's War (PP 19, 15-1)
    Orb (PP 16, 7-2)
    Normandy Invasion (PP 5, 12-1)

    Live Longshots that can also hit the board (meaning top 4):

    Vyjack (PP 20, 15-1)
    Itsmyluckyday (PP 12, 15-1)

    I think any of these 4 can win it, so I would be looking to do some Exacta and Trifecta boxes:

    Theoretical bets:

    $2 Exacta Box (3, 19, 16, 5) = $24
    $1 Trifecta Box (3, 19, 16, 5) = $24
    $0.10 Superfecta Box (3, 19, 16, 5, 20, 12) = $36
    $0.10 Superfecta Box (16, 5, 15, 12, 14, 8) = $36

    Good luck!
    Price Headley,
    BigTrends.com
    1-800-244-8736

    (click to enlarge)

    May 03 1:02 AM | Link | Comment!
  • The Biggest Pitfalls Rookie Option Traders Make

    When an investor realizes the great leverage power of options and begins to dabble in them in their brokerage account or IRA, I've seen them make the same mistakes time and again.

    I've been trading and analyzing options since the early-1990s and at BigTrends.com we've been educating and providing specific trade recommendations since 1999.  So we've seen it all, and have learned the most common mistakes traders make and the best ways to avoid those and get an "edge" over the markets.

    1st — Those who are new to options are immediately attracted to the very cheap "lottery ticket" type Out-of-The-Money (OTM) options.

    By this we mean the options that are priced at 0.25 ($25) or below, for example.  These are the OTM Calls and Puts that can potentially give very big gains, but have a low probability of success.  These options tend to have a very low Delta (which is an Option Greek that can be interpreted as a probability of the option expiring In-The-Money (ITM)).

    Additionally these options have no "intrinsic value" and are 100% "time premium" — so you will lose value on the them due to time decay as the clock ticks towards expiration.  And you may also lose value due to decay in implied volatility (Vega option greek).

    So we tend to prefer ITM options.  These generally have a lesser amount of time premium & implied volatility built into them and have a higher Delta — so basically you normally get more "bang for the buck" with an In-The-Money option.  Additionally your overall volatility should be less when trading these versus very cheap OTM options.



    2nd — Traders enter positions without a gameplan, or specific targets and rules for taking profits and limiting losses.

    Again, we've seen this time and again and all traders have done this at one time or another in their trading accounts.  Letting a winning trade turn into a loser, or letting a small moderate loser become a big loser.

    This comes down to discipline and having a organized set of rules.  For example, if a trade doubles (goes up 100%), you may have a rule that you exit half of your position immediately, then you basically have a "free trade" on the remainder of your contracts.

    You also could have specific targets for the underlying stock/ETF/security and when those are reached you exit part or all of your position, regardless of where the option price is.  Another valuable strategy is to have a trailing stop-loss for winning positions, so that you can stay in the winners and let them run, but if it pulls back by a certain amount you still lock in your profits.  Or you can have set rules such as taking partial profits at 25%, 50%, etc.

    But the bottom line is that without having systems, rules, indicators, and discipline you are somewhat trading "blind".

    And for the losing trades … we've all had them.  First, I've learned through experience that the best trades tend to go your way quickly.  If a "perfect" setup is just sitting there and not going your direction, it may be time to cut bait and move on to the next opportunity.

    Next to the problem of "hope and wait" on losing trades (also known as "Hopeium"), this is how a small 15% or 20% loser can turn into a 50%, 75% or even 100% losing trade.  And those can put a big damper on your portfolio and create a trading hole that you then have to dig out of.

    So limit your losses to small amounts.  The goal in general is to have winning trades be 2x to 3x the size of losing trades, depending on the win/loss ratio of your strategy.  Have rules and discipline in place on your option trades.  For example, have a specific stop-loss, or a technical indicator that when violated gives an immediate exit on the position. 

    In general, having a clear trading plan with systems, rules, indicators and goals will provide more confident and successful trading results over the long run.

    Trade Well,
    Price Headley



    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Jan 06 4:28 PM | Link | Comment!
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