Humble

Happy New Year everyone! Wishing you and your families a lot of health, prosperity and happiness in 2015. 2014 marks our third year as a public service. We had a fantastic year. We closed 150 trades in 2014 which produced 146.6% ROI, based on fixed $1,000 allocation per trade (non-compounded) and 6 trades open. The winning ratio was pretty consistent around 63%. We had only one losing month in 2014. Check out the Performance page to see the full results. Please note that those results are based on real fills, not hypothetical performance. Click here to view the article

I think you described very well the potential issue with this trade. Since VIX can easily move 1-2 points when volatility is elevated, it turns out binary trade if you hold it through expiration. VIX settled at 24, but it could easily settle below 20 if the markets rallied, causing 100% loss. With those cash settled indexes, I usually don't hold through expiration. It's a bit of gambling. But getting 0.80 is still very nice gain. And sometimes you can get 0.60-0.70 early in the game on one side and wait for VIX to calm down and get some good premium on the other side as well.

Those who trade ICs and hold to expiration simply don't understand the huge gamma risk. It doesn't mean that this cannot work in the long term. It just means that those are very risky trades, that deserve only very small allocation. But this is not what they communicate to their members. Here are some of the gems found on this site: Losses are cut soon, and managed properly. we use low risk positions that produce low returns (~5%). Those trades are NOT low risk. Far from it. And if the market gaps 1-2 days to expiration, you just cannot manage the losses due to high negative gamma. And here is where the main problem is: those claims are very misleading.

Those guys "manage" to produce at least few big losses pretty much every year: 2010: -75% 2011: -95%, -30%, -37% 2012: -22%, -20%, -60% 2013: -35%, -25%, -26%, -35% 2014: -34%, -64%, -83%, -100% Yes, same guys as 10ppm. They lost 31% and 38% in 2008, 70% in 2010, and their performance reporting is very questionable.

By Gery Nagy, optionsrules.com In the present article, I am going to explain how you can make money if you own shares and the market moves sideways. You know my attitude towards simple share buying, so I won’t go into details at this time. The starting point is that you own 100 AAPL shares. For some reason, you bought it and hold it, that’s your business. Meanwhile, you use the well-established, but mostly pretty weak, stock market risk management method: the stop loss. You hold the paper and expect a price increase, because you still believe in the Buy and Hold strategy ... Click here to view the article

We will check the potential trades case by case. There still will be plenty of opportunities.

For our earnings calendars, I believe that the front month provide the best risk/reward, assuming that the calendar is still cheap. For your second question - this is always a risk, and this is why I avoided playing ORCL and FDX last week. I prefer to miss a trade than risk IV collapse and significant loss.

I don't think there is a difference, except for lower commissions costs for higher priced stocks. Consider stock that moves ~3%. On 100 straddle you would roll from 100 to 105 strike, and on 30 straddle you would roll from 30 to 32 strike. In terms of volatility impact, there should not be a difference either because vega on higher priced stocks will be higher (all other factors equal).

Yes, but this structure is not practical for most retail traders due to huge margin requirements and low potential return on margin.

This is always a risk. But if the stock moves enough, gamma gains will usually offset the vega losses.

You are looking for vega negative gamma positive strategy. Not aware of any.

Lets examine one of our straddle examples where IV spike had a significant impact. On July 28, we entered EXPE straddle at $8.45, with options IV around 59%: Take a look at the Greeks: Theta: -$23.00 (2.8% per day) Vega: $14.00 Fast forward 2 days later: IV of the options jumped to 77%, and the trade was worth $10.50, up 24%. Now, lets do a quick math. Vega $14 means that each 1% (one point) IV increase will increase the value of the trade by $14. IV increase by 18%, so the trade should be up by $252. However, we should reduce it by two days of negative theta ($14*2=$28), so the next result should be increase of $224. The actual result was $1050-845=$205. Close enough. We closed the trade for 16% gain, but some members held a bit longer and booked 25-30% gain. Now lets see what happened 2 days later after they reported earnings. Despite the stock moving 6%+, the trade would be down 26%. This is a direct result of IV collapse - IV of the options went down to 39%. And this is exactly why holding through earnings is so risky. In this case the loss was actually not so high because there still was 14 days to expiration. With options expiring in few days, the loss can be 80-90% if the stock doesn't move. This is why it is so important to pay attention to the Implied Volatility.

Lets take a look at SPX calendar trade we initiated on Dec. 04. This is the initial P/L chart of the trade: Now lets take a look at T+8 P/L chart - this is what the ONE software projected where we would be today: With the current price of 2027, the trade would be down ~37%, all other factors equal. However, take a look what happens if we adjust the IV by just 3 points: Now take a look at the current P/L chart: The trade is almost breakeven, despite the fact the SPX moved full 50 points from the strike! This is a direct result of IV spike. If SPX moved up the same amount, the trade would be down probably 50%. Of course this assume that we didn't adjust (we had to, this is part of our risk management plan, and the trade was closed for 7% loss). But in this case, understanding the impact of IV helps you to see that down moves in calendars are not as destructive as up moves because the trade is vega positive, so IV spike which usually happens on the way down helps the trade a lot.

IV of individual stocks is set by market makers. Any options software like ONE will show it the IV, and your broker should show it as well. I will provide few examples from our recent trades to demonstrate how IV impacts the trades.

I'm creating this topic to discuss one of the most important aspect of options trading - Implied Volatility. We will discuss examples how IV impacts our trades. I welcome questions from members and forum guests (registration required).

It is a well known fact that most retails traders/investors lose money in the stock market. The numbers vary from 80% to 95%, but the fact remains. There are many explanations for that phenomenon, such as: poor money management, bad timing, bad government policy, poor regulation or a poor strategy. Personally, I'm not surprised. As an options newsletter editor, I see exactly why vast majority cannot make money consistently. I was there. Experienced it first hand. But first things first. Click here to view the article

In one of my previous articles I described a study done by tastytrade, claiming that buying premium before earnings does not work. The title of the study was "We Put The Nail In The Coffin On "Buying Premium Prior To Earnings". ​I demonstrated that their study was highly flawed, for several reasons (strikes selection, stocks selection, timing etc.) It seems that they did now another study, claiming to get similar results. Click here to view the article

Yes. And US Options is free as well if you generate $20/month in commissions.

For real time quotes in IB, you need US Securities bundle (to be replaced with US value bundle) which is $10/months, but waived if you generate $30/month in commissions. I also have Russell Indices for $2 and CBOE Futures for $3. Worst case if some subscription is missing - it will tell you.

One of the reasons why I don't offer auto-trading: http://www.ripoffreport.com/r/TD-Ameritrade-IncRed-Options/Omaha-Nebraska-68127/TD-Ameritrade-Inc-Red-Options-Misled-me-to-believe-investing-in-Options-CallsPuts-and-1053998#comment_3

Our readers and members know that our returns are verified by Pro-Trading-Profits, an independent third party website that tracks performance of hundreds investment newsletters. They have an excellent explanation how to analyze and compare performance of different trading systems. Here are some highlights of their article. Click here to view the article

Take a look at this post - http://steadyoptions.com/forum/topic/1515-placing-a-trade-on-interactive-brokers/ Let me know if it helps. Basically you need to add a combo to a quote monitor. Once it's there, you just right click on it and select "Close position".

Thank you everyone for your kind wishes. I hope to be able to provide you with the best and most profitable service for years to come.

Thank you Jesse, appreciate it. Although I see no merit in the fact that after my birth Earth made 50 revolutions around the sun.. so now you know in case you didn't..

Equity markets the world over have gained hundreds of billions of dollars in value over the last few hours for one very simple reason, the Global Economy is infact WEAKER than you thought before you went to sleep last night. Rejoice. http://www.riskreversal.com/2014/11/21/morningword-112114-one-of-these-days/