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Hari Swaminathan
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OptionTiger.com is founded by Hari Swaminathan, an entrepreneur, everyday person and a self-taught Options trader for over 5 years. Hari also writes the blog at OptionTiger.com, an insightful commentary of the most important issues in macroeconomics, investing, trading, Option strategies, Index... More
My company:
OptionTiger.com
My blog:
OptionTiger Blog
My book:
Top 7 Options Trading Mistakes
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  • Announcing Options Trading Beginners Package

    This post was originally written on March 23, 2013 at http://www.optiontiger.com/options-trading-beginners/

    Options trading beginners package

    I've mentioned many a time that the single biggest challenge Options trading beginners face is that of trial and error in the first few months of Options trading. You think you know how Options work, and you put on a couple of trades. Occasionally, beginner's luck favors the newbie and a couple of good outcomes is all you need to get your adrenaline pumped up. So far so good..

    But a majority of Options traders give up in the first year because -

    1) They try certain strategies, lose money but can't figure out why their trades lost money.

    2) Repeated trial and error ultimately has a debilitating effect on their accounts, and they're forced to exit the business forever.

    At OptionTiger, we want you to avoid falling into this trap. Options have a learning curve. To help Options trading beginners, we've put together this great "starter" package. It includes a FREE 2-month mentoring service for your trades. This is invaluable, because this is the time most Options traders make their mistakes. Check it out by clicking the links below.

    (click to enlarge)

    DVDpackage-Starter2

    Click here to find out more and get started today.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    May 16 5:37 AM | Link | Comment!
  • Studying Open Interest For Stock Direction

    This post was originally written on March 24, 2013 at http://www.optiontiger.com/open-interest-and-stock-direction/

    Open Interest and Market Direction

    http://www.optiontiger.com/wp-content/uploads/2012/07/5.pngVolume and Open Interest (OI) are widely used to assess the liquidity of an Option. High OI and / or Volume in Options usually means good liquidity, and consequently, once can expect decent Bid-Ask spreads. But very few traders tend to use OI as a tool to determine market (stock) direction. There are good reasons for this - you have to track OI for all the stocks you follow, and then for specific options at specific strike prices. Generally, this is not a practical approach.

    But let's say you were interested in a stock one particular morning. There's pre-market chatter and you know that the stock is going to be hyper-active today. In this case, you've decided to focus your attention to this stock at least for the day. When a stock is in this state, it can give you multiple trading opportunities in one day itself - there'll be an initial burst when the market opens, and then a cool-off period, and perhaps another big run or two late in the day. These moves can provide for an exciting day. So, how can you take advantage of this kind of a situation ?

    This is a cutting-edge method (if I may say so myself ) using Open Interest, that can provide you with high-probability entry or exit signals. Truth be told, I've not heard anyone else using this method as an indicator, so at this moment, I'm going to claim that this method is mine. And I've become more convinced over the years because it has worked quite well. What you'd want to do is note down the At-the-money Open Interest of the Calls and Puts before trading begins for 2 or 3 strikes. And then see what happens at 9:30 am ET.

    There are four different combinations possible (assuming flat or sideways action is not among them) -

    1) Stock is moving up, and Call Open Interest is increasing

    This is Bullish. The increase in Open Interest (Call buyers coming in) is being confirmed by the momentum and price move to the upside. You can be more confident about taking a bullish position at this time.

    2) Stock is moving up, but Call Open Interest is decreasing This tells you the bullish momentum is probably going to run out soon. This is a leading indicator of a potential reversal in the stock. People are closing out their open Call positions. If you opened a Long Call in the previous case, you should be scaling out. 3) Stock is moving down, and Put Open Interest is increasing Strong bearish sentiment and increasing. Good time to buy Long Puts and ride the wave down. 4) Stock is moving down but Put Open Interest is decreasing

    The bearish sentiment is probably going to run out soon. This is again a leading indicator signaling a potential reversal move to the upside.

    Whenever I've used Open Interest for determining market direction, it has resulted in a high-probability trade most of the time. So in my opinion, this definitely works. But the problem is it's not practical to watch this for more than one stock at a time. So unless you're focused on taking advantage of a big move in one stock for that day, this method is not scalable. The second problem is - it will only work on active stocks whose Options are also active. There are some stocks which will be very active in the stock market, but not quite so in the Options markets, even when there is fundamental news events around it. It won't work there, because you need to be able to see some quick changes in numbers in the Open Interest column.

    But if your goal is to make a killing on a day-trade on one active stock, by all means, knock yourself out..Let me know if you liked this method..and if you try it, would love to hear your experience.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    May 16 5:23 AM | Link | Comment!
  • Trading Ideas Service – Jan 2013

    This post was originally written on February 1, 2013 at http://www.optiontiger.com/trading-ideas-service-jan-2013/

    Performance - Jan 2013

    The Trading Ideas service was debuted in Jan 2013 as a test month. And the service was launched on Jan 25th, 2013.

    The results for January are in using the Thinkorswim Papermoney account and these are the details.

    Starting capital = 338K

    Profit / Loss for Jan 2013 = $25,600

    Return = Almost 8%

    Trades = approximately 15

    Number of stocks = 5

    Stocks traded = SPX, AAPL, NFLX, NDX, LNKD

    Find out more about Trading Ideas and subscribe here - http://www.optiontiger.com/trading-ideas/

    Snapshot below

    (click to enlarge)Jan

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    May 16 5:03 AM | Link | Comment!
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