I’ve been having a ball experimenting with CML’s TradeMachine Pro, which is an extraordinary tool for finding options ideas and doing backtesting. We have a special deal running with CML (click here to learn about it and watch a video about the product). Here’s a simple example – – it’s fascinating to see the sort of mayhem (and then eerie calm) leading up to and following the financial crisis.
Slope of Hope Blog Posts
This is the heart and soul of the web site. Here we have literally tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. You can also click on any category icon to see posts tagged with that particular category.
What a week for #TeamBears!
The Fed’s rate hike cycle finally broke the backs of small caps, as illustrated by BOTH the (#1) break and close below of the Summer low (which is also prior swing pivot) on the daily and weekly RUT charts, and (#2) the break of the up channel formed since Summer 2017.
Our beloved bear leader Tim Knight made massive profits, and Slope traffic rose validating his tremendous efforts to improve the website. (more…)
From CMLViz: October is historically the most volatile month of the year for stocks and 2018 is proving to be no different. On a stock specific note, Intel now has analysts strongly on two different sides — either it is making a comeback or it has lost ground forever to AMD. That may mean more volatility, but that has in fact created a pattern for Intel. Here is a nice look at historical volatility by Month for the Dow Jones Industrial Average: (more…)
About 15 years ago, when I was running my company Prophet Financial Systems, a brilliant young man with a freshly-minted Stanford graduate degree was starting an options software company and needed live data. He came to Prophet and we established a business relationship which was positive for both parties.
That same brilliant (but now older, just like all of us!) man, Ophir Gottlieb, has gone on to create an extraordinary platform that back-tests and scans for options opportunities called CML TradeMachine Pro. Based on our long history together, Ophir has kindly offered my readers here on Slope a 40% discount on the service (which is in effect for life) by signing up here. For those of you who are options traders, I heartily urge you to check it out. Here’s a video that really walks you through it: (more…)
Big news, everyone! SlopeCharts now has volatility charts!
Not only can it plot volatility, but it offers this data in a wide variety of parameters. As with almost all new features from now on, I’m going to do the same thing:
- Launch it;
- Get feedback;
- Restrict its access to paying members (this happened recently with the Earnings Reaction page, which is now exclusively for Diamond members………Slope’s fastest-growing group)
So, for the moment, this is free for any of you to use. (more…)
The saga of Tesla from Thursday afternoon to Saturday morning is truly one for the books. The consensus seems to be that Elon got off with a slap on the wrist (although let’s not forget the mountain of civil lawsuits awaiting him), but the simple fact is that the crushing Tesla took on Friday has vanished now that this uncertainty has been removed by the SEC’s forgiveness:
This is the kind of gain options traders dream of – – $6,000 in value yesterday, over $1 million today.
Note from Tim: I’m pleased to present another options trade ideas offering from Slope’s own The Director! Behind the scenes, we are beefing up the Diamond membership to encompass tools for options traders, and we’re whetting appetites out there with posts like these. Enjoy.
Outside of earnings ideas, here are some ideas based on edges in the field.
The Bollinger Band
The Bollinger band is a graphical standard deviation range away from the 21 day moving average developed by John Bollinger. The TTM squeeze is a proprietary indicator developed by John Carter that describes a state that where the Bollinger band is in a compressed, low volatility state.
When charts are in a lowered volatility state, they have an increased probability of a larger move in a specified direction. One can discern a higher probability of a certain direction using either the value and /or slope of simple momentum, or an increasing slope of the relative strength indicator (RSI), or the use of the Williams accumulation/distribution index’s slope diverging from the price. (more…)
HOW OPTIONS ARE PRICED
Options prices are governed by price of the underlying, time, liquidity and volatility.
We can choose instruments only with good liquidity (without it we are at a severe disadvantage)
Volatility mean reverts. We need to buy cheap volatility and sell when expensive. Pre-earnings, nearly all instruments have a sharp rise in volatility that accelerates from D-7 to D0. IV rank/IV percentile will tell us if an instrument has cheap or expensive volatility.
Time. Options decay with time. Because of this we cannot buy a put and call at the same time expecting certain profits. IF volatility is high enough, it can cancel out the effect of time. Pre-earnings this often happens. (more…)
It’s the return of……….The Director! First, let’s examine American Airlines. (and, as always, click on any graphic for a bigger view)
Based on Tim’s analysis, he believes it is more likely to go down. We can profit if the price goes down OR stays the same. Let’s do a combined diagonal spread AND calendar. (more…)