I use four strategies in my trading, in response to trading signals (such as breakouts above the 20-day price channel), high implied options volatility, and persistently rising trends on a charts signaled by the stochastic-relative strength index indicator, and in anticipation of events ( such as earnings announcements).
| options | shares | |
|---|---|---|
| price channel | N/A | N/A |
| earnings | 0 | 0 |
| volatility | 3 | N/A |
| stochastic-rsi | N/A | 5 |
I shall make final trading decisions on Monday, Nov. 28.
by Dr. Howard B. Bandy |
Below are the candidates for analysis for each type of analysis.
Options:Volatility
| GDXJ |
| TBT |
| TLT |
Shares:Stochastic-RSI-20
Shares:Stochastic-RSI-80
Shares:Stochastic-RSI-50
The earnings season begins in mid-January with AA's announcement and will continue for six weeks.
The four symbols, listed above, meeting my criteria for Options:Volatility trades are the usual suspects: A gold mining ETF plus two symbols related to long-term Treasuries. I'll look at them, as always, but I'm unlikely to trade them because of the nature of the underlying.
I'm trying something new in this period between the earnings seasons. I developed my trading strategy independently of the trading education network TastyTrade and it's hands-on affiliate Dough. However, their methods and mine are very close, although their standards on liquidity and their definition of what is high implied volatility seem to differ from mine.
One thing they do, on Dough, is to send notice of trades when they are made, much as I do in greater detail on Private Trader. I shall be emulating some of those trades, brining to it my normal analysis, as a learning exercise.
Two trades from Friday, by Dough trader Aaron, are C and FXE, and I shall be looking at both on Monday. I'll also look at other trades from the Dough team that are posted on Monday.
C normally wouldn't qualify under my rules because its implied volatility is in the 9th percentile of the annual range. I require the 50th percentile and higher. FXE would not qualify under my guidelines because of low average volume -- under 3 million shares -- although the options grid has high open interest.
In part the analysis will be, "What in the world were the Dough folks thinking?". Should be fun.
The candidate in the Shares:Stochastic-RSI-20 group, IGT, goes ex-dividend on Dec. 1, and I shall hold through that date, making it a hybrid Stochast-RSI/dividend play.
I've added a category to the Stochastic-RSI tactic, one that tracks breakouts above the midway point, the 50% line. To be included, a stock must be upward trending with a price line between the 50% and 56% level. I refer to it as the Shares:Stochastic-RSI-50 group.
Readers will recall that in my outcomes analysis last week, Small Lots Aproach: Analysis 7/2016 through 10/2016, I noted poor returns from the RSI-20 tactic and better but still negative returns from the RSI-80. One remedy I mentioned was uptrending crosses of the center line. The RSI-50 tactic is intended to test that proposition.
References
Tradecraft: Playing the odds to build winning stock market trades from options, a description of how I trade, can be read here.
Small Lots: A new strategy discusses the thinking behind the analysis that identified these trades and can be read here. The symbols noted in this post are intended fortrading on a commission-free platform such as Robinhood Financial.
I can be reached via comments on Private Trader posts or by email at datnillc@gmail.com.
Alerts
Two social media feeds provide notification whenever something new is posted.
All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
Based on a work at www.timbovee.com.
| IGT |
| DD |
| REN |
Shares:Stochastic-RSI-50
| ALRM |
| TI |
Notes
The earnings season begins in mid-January with AA's announcement and will continue for six weeks.
The four symbols, listed above, meeting my criteria for Options:Volatility trades are the usual suspects: A gold mining ETF plus two symbols related to long-term Treasuries. I'll look at them, as always, but I'm unlikely to trade them because of the nature of the underlying.
I'm trying something new in this period between the earnings seasons. I developed my trading strategy independently of the trading education network TastyTrade and it's hands-on affiliate Dough. However, their methods and mine are very close, although their standards on liquidity and their definition of what is high implied volatility seem to differ from mine.
One thing they do, on Dough, is to send notice of trades when they are made, much as I do in greater detail on Private Trader. I shall be emulating some of those trades, brining to it my normal analysis, as a learning exercise.
Two trades from Friday, by Dough trader Aaron, are C and FXE, and I shall be looking at both on Monday. I'll also look at other trades from the Dough team that are posted on Monday.
C normally wouldn't qualify under my rules because its implied volatility is in the 9th percentile of the annual range. I require the 50th percentile and higher. FXE would not qualify under my guidelines because of low average volume -- under 3 million shares -- although the options grid has high open interest.
In part the analysis will be, "What in the world were the Dough folks thinking?". Should be fun.
The candidate in the Shares:Stochastic-RSI-20 group, IGT, goes ex-dividend on Dec. 1, and I shall hold through that date, making it a hybrid Stochast-RSI/dividend play.
I've added a category to the Stochastic-RSI tactic, one that tracks breakouts above the midway point, the 50% line. To be included, a stock must be upward trending with a price line between the 50% and 56% level. I refer to it as the Shares:Stochastic-RSI-50 group.
Readers will recall that in my outcomes analysis last week, Small Lots Aproach: Analysis 7/2016 through 10/2016, I noted poor returns from the RSI-20 tactic and better but still negative returns from the RSI-80. One remedy I mentioned was uptrending crosses of the center line. The RSI-50 tactic is intended to test that proposition.
-- Tim Bovee, Portland, Oregon, Nov. 26, 2016
References
Tradecraft: Playing the odds to build winning stock market trades from options, a description of how I trade, can be read here.
Small Lots: A new strategy discusses the thinking behind the analysis that identified these trades and can be read here. The symbols noted in this post are intended fortrading on a commission-free platform such as Robinhood Financial.
I can be reached via comments on Private Trader posts or by email at datnillc@gmail.com.
Alerts
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Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.
No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.License
All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
Based on a work at www.timbovee.com.
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