Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.
Over the past several weeks, I've noticed a steady but very clear climb in Slope's traffic (this is one uptrend I do not mind seeing). I haven't seen traffic this strong in many, many months.
This is particularly gratifying to me since Slope is, let's face it, predominantly a blog for stock market bears, and since down-days have apparently been ruled illegal, it's shocking that more and more people are crowding into my little corner of the web.
The Federal Reserve would have you believe that their policies are helping the U.S. economy and at worst, they are benign. The political elite would have you believe that all is well and getting better every month. The financial elites are telling you time to rotate out of those bond and money market accounts because the Fed saved us, and the Administrations policies are working. Get ready for the next boom.
There is a reason why out-of-the-money options are so cheap; it’s the equivalent of buying a lottery ticket. And gamblers love lottery tickets.
But unlike the typical lottery system where the seller of the ticket pays only a small portion of the overall proceeds in the form of winnings, options are a zero-sum game in the truest sense of the definition – winner’s profits are loser’s losses. And the majority of loser’s losses typically come in the form of speculative out-of-the-money plays.
The winners know how to skew the results. Moreover, they know the risk-reward and the probability of success BEFORE each trade.
In the options world the gambler is defined by a trader who buys a call or put with a delta of .35 and below. (Delta is the probability that an option will expire in the money.)
Like lottery tickets in the store, options with deltas this low have a low probability of success. But because of their cheap price and high-profit potential, they lure in newbie options traders.
This is why I prefer to take the other side in this zero-sum game. I do so by essentially taking the other side of the trade – by selling options to the speculative crowd.
Ratio Charts comparing the SPX to other Major World Indices
6 Major Indices
As shown on the Weekly charts and 1-Week percentage gained/lost graph below of the Major Indices, all but one closed higher on the week than the prior week. Rather than the Dow Transports Index leading on this week's gains (as it has in the past few weeks), it was the one that lost a minor amount. The Nasdaq 100 gained the most, and the Russell 2000 gained the least.