February 2008 - Posts

• Bonus Trade: Bullish on VIX

  Wednesday, February 27, 2008 4:56 AM

  As you might expect, the rally of the past two days has pushed the VIX down quite a bit. As the VIX daily chart shows, the index is today pushing against the lower edge of its Bollinger band, and just a hair off its 200 DMA. The Thesis The thesis here is just that the VIX is mean-reverting, and that since June of last year it hasn’t flirted with its 200 DMA for long without bouncing right back up Read More Posted by CondorOption 0 Comments Go to top

• Bonus Trade Followup: LEH, XLE, QQQQ

  Sunday, February 24, 2008 12:56 AM

  Our Energy ETF (XLE) trade, published on Tuesday, has worked out beautifully so far, so let’s start there! XLE fell $2.09 today, or 2.74%. We published three different ways to trade options on this ETF, and all of them have worked out nicely: The naked long XLE March 75 puts were $2 Read More Posted by CondorOption 0 Comments Go to top

• Weekend Review

  Sunday, February 24, 2008 12:54 AM

  So, the markets were bordering on sane and orderly yesterday; thank goodness we had a massive 200+ point Dow swing in the final hour of trading to keep things normal, that is to say, inscrutable. Actually, there was some real news that drove this buying Read More Posted by CondorOption 0 Comments Go to top

• Bonus Trade: Energy (XLE)

  Wednesday, February 20, 2008 1:53 PM

  Energy is still a hot sector, China and India keep using more oil, yadda yadda. You probably know the fundamentals of this story by now as well as or better than we do. But this is a trade, not an investment. The thesis : The energy sector is short-term very overbought Read More Posted by CondorOption 0 Comments Go to top

• The Volatility Edge in Options Trading

  Tuesday, February 19, 2008 1:46 PM

  Books on options trading generally come in two varieties. First, there are the bloodless, esoteric academic treatises that reach truly substantive and innovative conclusions, but never bother translating that quantitative research into strategies that are useful for the individual options trader Read More Posted by CondorOption 0 Comments Go to top

• How to Hack Options Spreads

  Sunday, February 17, 2008 4:19 AM

  If you’ve ever used the thinkorswim desktop platform, you may have noticed the little ‘Spread Hacker’ tab in the software. This isn’t a feature that gets talked about much, but it’s fun to play around with. While this may or may not be the original intent of the feature, it’s especially useful for generating slightly wacky ideas that you might not otherwise have considered Read More Posted by CondorOption 0 Comments Go to top

• The Importance of Volatility Premium

  Friday, February 15, 2008 10:45 AM

  You might say that the three key components of any options trade are time, price and volatility. That is to say: the time left until those options expire, the price of the underlying, and the volatility implied in the options prices. It’s easy to forget that last component, and sometimes people don’t take implied volatility into consideration when opening trades Read More Posted by CondorOption 0 Comments Go to top

• Cash Is A Position

  Saturday, February 09, 2008 10:25 PM

  Following up on last week’s thought experiment about the components of a good trader (we’ll get to Part 2 of that one later), here’s another thought experiment about that most exciting of topics, portfolio management. Two asset managers walk into a bar Read More Posted by CondorOption 0 Comments Go to top

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