Covered Calls: The Sweet Spot, Part 2 [View article]
Hi RK,
my statement that 1% weekly is equivalent 2% monthly comes from standard deviation calculation, namely that SQRT(30 days/365) is approximately twice the SQRT(7 days/365). So, if one expects 2% deviation within 1 month, he should expect 1% deviation within a week.
Covered Calls: The Sweet Spot, Part 2 [View article]
Hi RK, Would that be correct to say that as monthly deviation of 2% is equal to weekly 1%, if one sells weekly naked calls, he should go 1% OTM? Thank you
The Era Of Buy And Hold Is Over - Using Trade Structure To Play The Swings [View article]
Well, I just did not fully understand how the trade evolves during its lifetime, be it experimental strategy or actual strategy. Now, I understand better.
I support a lot your thesis about trade structures, and its advantage over emotional/ arbitrary trading.
What would be your initial entry strategy in the real life if not flipping coin then? :)
The Era Of Buy And Hold Is Over - Using Trade Structure To Play The Swings [View article]
Thank you, Joseph, for bearing with me. Though i'm still not fully clear on the strategy. So if you went long on Aug 2 @ 1383, where your take-profit point will be, when you close for profit and reverse the position? -- If it is mean + 2SD, then you are already over it.
It might help if you give specific example based on the five days data from your previous comment. Say, for the sake of understanding, you flip the coin to be long on day 1 when S&P is 1430.60. What stop-loss and take-profit would you set then? And now, how would you adjust your stop-loss and take-profit on day 5, when S&P is 1460.70?
The Era Of Buy And Hold Is Over - Using Trade Structure To Play The Swings [View article]
Hi Joseph, thanx for the article and for sharing your knowledge and experience!
Could you please clarify two questions: 1) would you re-evaluate stop-loss (1xSD) and take-profit (2xSD) during the trade? 2) would put the stop-loss and take-profit relative to the current reading of a stock, or to its 90-days mean?
For example (numbers are not real). SPY = 147. SMA(90) = 137. StdDev(90) = 4.5. I flip the coin to be long. Well, the answer to the #2 seems obvious -- there is no point to set take-profit below current reading. So, I buy SPY @ 147 with t/p @ 156 and s/l @ 142.5. Now, the question #1. If SPY consolidates for a while, StdDev(90) will gradually decline -- should I adjust my t/p and s/l, or just leave it fixed at the level of entry?
Please confirm my understanding. Thank you, Sergei
Playing Silver: Bull Or Bear With Options On iShares Silver Trust [View article]
Hello RK,
i read all your articles and I join other readers thanking you for the efforts and very structured and clear approach that you have. I hope you still have ideas for the articles!
Could you please explain further as to disadvantages and risks (or advantages if any) for the leveraged ETFs, incl. their short variety (e.g. AGQ, ZSL). I know you dislike them, so please share your more detailed view of them, like you've recently done with ETNs...
Pair Trading Silver ETFs: Using Leverage To Your Advantage [View article]
Am I missing something, but to me this strategy is effectively equivalent to selling a straddle against one of the ETFs. That is, if ZSL is an opposite of AGQ, then buy-write for ZSL, which is equivalent to selling put for ZSL, which in turn is effectively equivalent to selling call for AGQ. And for AGQ we already have a covered call, i.e. equivalent of sold put. Hence, we have basically sold a straddle against AGQ. (i am definitely omitting the whole point of decorrellation).
If I am correct, this trade has all the risks of selling straddle, for instance, having rich premiums of 10% a month (or even 20% for both call and put) may still not be enough if silver moves more. (and my belief is that rich premiums, or high IV, has its reason normally).
So, it is not true that opposite moves in AGQ and ZSL cancel one another if you also sold calls against both. Your upside is capped, but downside is not. If silver moves, say 15% up, AGQ will only earn 10% (=call premium), and ZSL will lose all 15%.
A good proof that your strategies work well for you is that you are not following any other contributor in SA... And thank you for the very practical articles.
Elaborating on "deep pockets" question: - you mentioned previously that you are fully invested - and now you "find myself staring at many shares that are showing paper losses" Could you please explain more in detail, from your experience, how much (%) one should allocate to VXX or keep as free cash to be ready to buy more of losing shares for two-three consecutive periods, especially if more than half of portfolio is down?
Current Schedule For Consulting/Meetings Using The Daily Options Trading Strategy [View instapost]
Hello Kevin, thank you for sharing The DailyOptions Trading Strategy. I would love to read your book, but i do not own Kindle Fire yet :) I am sure I've seen in some comments to your posts a link to Windows version of the book, but I cannot find it anymore. Could you please share it again? Thank you....
Covered Calls: The Sweet Spot, Part 2 [View article]
my statement that 1% weekly is equivalent 2% monthly comes from standard deviation calculation, namely that SQRT(30 days/365) is approximately twice the SQRT(7 days/365). So, if one expects 2% deviation within 1 month, he should expect 1% deviation within a week.
Anyway, have a very prosperous New Year!
Sergei
Covered Calls: The Sweet Spot, Part 2 [View article]
Would that be correct to say that as monthly deviation of 2% is equal to weekly 1%, if one sells weekly naked calls, he should go 1% OTM?
Thank you
The Era Of Buy And Hold Is Over - Using Trade Structure To Play The Swings [View article]
The Era Of Buy And Hold Is Over - Using Trade Structure To Play The Swings [View article]
I support a lot your thesis about trade structures, and its advantage over emotional/ arbitrary trading.
What would be your initial entry strategy in the real life if not flipping coin then? :)
The Era Of Buy And Hold Is Over - Using Trade Structure To Play The Swings [View article]
Though i'm still not fully clear on the strategy.
So if you went long on Aug 2 @ 1383, where your take-profit point will be, when you close for profit and reverse the position?
-- If it is mean + 2SD, then you are already over it.
It might help if you give specific example based on the five days data from your previous comment.
Say, for the sake of understanding, you flip the coin to be long on day 1 when S&P is 1430.60. What stop-loss and take-profit would you set then? And now, how would you adjust your stop-loss and take-profit on day 5, when S&P is 1460.70?
Appreciate a lot.
The Era Of Buy And Hold Is Over - Using Trade Structure To Play The Swings [View article]
if you were to open a long position day 1, buying S&P futures @ 1430.60, what s/l and t/p would you set?
The Era Of Buy And Hold Is Over - Using Trade Structure To Play The Swings [View article]
Could you please clarify two questions:
1) would you re-evaluate stop-loss (1xSD) and take-profit (2xSD) during the trade?
2) would put the stop-loss and take-profit relative to the current reading of a stock, or to its 90-days mean?
For example (numbers are not real).
SPY = 147. SMA(90) = 137. StdDev(90) = 4.5. I flip the coin to be long.
Well, the answer to the #2 seems obvious -- there is no point to set take-profit below current reading.
So, I buy SPY @ 147 with t/p @ 156 and s/l @ 142.5.
Now, the question #1. If SPY consolidates for a while, StdDev(90) will gradually decline -- should I adjust my t/p and s/l, or just leave it fixed at the level of entry?
Please confirm my understanding.
Thank you,
Sergei
Playing Silver: Bull Or Bear With Options On iShares Silver Trust [View article]
i read all your articles and I join other readers thanking you for the efforts and very structured and clear approach that you have. I hope you still have ideas for the articles!
Could you please explain further as to disadvantages and risks (or advantages if any) for the leveraged ETFs, incl. their short variety (e.g. AGQ, ZSL). I know you dislike them, so please share your more detailed view of them, like you've recently done with ETNs...
Thank you!
Pair Trading Silver ETFs: Using Leverage To Your Advantage [View article]
If I am correct, this trade has all the risks of selling straddle, for instance, having rich premiums of 10% a month (or even 20% for both call and put) may still not be enough if silver moves more. (and my belief is that rich premiums, or high IV, has its reason normally).
So, it is not true that opposite moves in AGQ and ZSL cancel one another if you also sold calls against both. Your upside is capped, but downside is not. If silver moves, say 15% up, AGQ will only earn 10% (=call premium), and ZSL will lose all 15%.
What do you think?
Trading To Save A Position [View article]
Elaborating on "deep pockets" question:
- you mentioned previously that you are fully invested
- and now you "find myself staring at many shares that are showing paper losses"
Could you please explain more in detail, from your experience, how much (%) one should allocate to VXX or keep as free cash to be ready to buy more of losing shares for two-three consecutive periods, especially if more than half of portfolio is down?
Thank you...
Current Schedule For Consulting/Meetings Using The Daily Options Trading Strategy [View instapost]