GRPN Earnings Trade

Earnings announcements are made by publicly traded companies on a quarterly basis. The earnings announcement will be made after the close of the market or before the opening bell. Because of the uncertainty that surrounds these announcements (stocks can increase or decline significantly after an earnings announcement), the nearest term option prices will be highly…

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April 2015 /CL Strangle

Yesterday’s trading session saw crude oil (/CL) give up most of the gain from the previous two sessions. The increase in volatility offered another opportunity to sell rich premium. I chose to sell a strangle as outlined below. Here’s the trade: Sell 1 /CL April 33 Put @0.08 Sell 1 /CL April 71 Call @0.12 Credit received: 0.20…

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Weekend Portfolio Analysis (February 7, 2015)

Market Conditions The market continue to trade in a range similar to the previous three weeks with the SPX opening at 1996.67 and ending at 2055.47,  up 58.8 or 2.9% for the week.  The SPX is still just barely in negative territory for 2015, although it did reach a high of 2072.4 during Friday’s trading session. The SPX pierced both the…

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Trading the Probabilities, Part 2

In the first installment of Trading the Probabilities, I introduced the concept of standard deviation and how it can be used to determine the statistical chance of a stock price closing within a given range over a specified period of time. In this post, I will examine additional considerations for the probabilities trader along with the…

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Trading the Probabilities

Unlike stocks and commodities, which have a maximum probability of profit (POP) of 50%, options offer a big advantage in that the trade can be structured to permit a much higher probability of profit. Any underlying that exhibits random behavior around a mean (Brownian motion) will have a price distribution that closely resembles a bell…

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