Six of the nine either failed confirmation or had momentum moving contrary the signal.
Of the remaining three, IYR and HRS have front-month at-the-money bid/ask spreads on calls in excess of 10%, moving them beyond what I'm willing to accept in a trade.
The last symbol standing, RHT, has low implied volatility relative to its most recent range, standing in the 12th percentile. My preferred trading strategy these days, option vertical spreads sold for a credit and expiring in the front month, requires implied volatility in the 60th percentile or higher.
So in the end, none of the three finalists made it past the post, and I intend no trades based on signals given in Friday's markets.
One symbol, WAG, met my criteria for consideration as a very short term play keyed to an earnings announcement. However, it failed to make the grade because it is non-trending, make it impossible to pick a direction. See my analysis, "WAG: Volatility play", posted earlier today.
-- Tim Bovee, Portland, Oregon, Dec. 22, 2014
My shorter-term trading rules can be read here. My longer-term trading rules can be read here. And the classic Turtle Trading rules on which my rules are based can be read here. My volatility trading rules can be read here.
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 decisions for his or her own account, and take responsibility for the consequences.License
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Based on a work at www.timbovee.com.
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