Thursday, December 31, 2015

Monday's Prospects

On Thursday, Dec. 31, 2015:

Of 493 large-cap stocks and exchange-traded funds in my analytical universe, none broke beyond its 20-day price channels,.

There are no prospects for trades coinciding with earnings announcements.

Lacking prospects, I shall do no further analysis of potential new positions on Monday, Jan. 4, 2016.

Earnings season begins Jan. 11 when AA publishes results after the closing bell. The higher pace of announcements will continue for about six weeks.

Methodology

The stocks in my analytical universe all have analyst coverage through the stock-ranking company Zacks Investment Research. Not all of the exchange-traded funds are so covered.

I screen the symbols for historical odds of a profitable signal in the direction of the breakout for the past 12 months.

For symbols whose odds of success are in the top or bottom thirds, suggesting a directional or non-directional trade, respectively, I next screen for 1) suitability of the options grid, including open interest of three figures or greater on the strike prices I would need to use to build a position, 2) implied volatility in the 60th percentile or greater of its 12-month range, and 3) the absence of an earnings announcement within the lifespan of the like options series I would trade. For symbols with odds of success in the bottom third, I also screen for low implied volatility, in the 40th percentile or below, suggesting a covered call play.

-- Tim Bovee, Portland, Oregon, Dec. 31, 2015

References

Tradecraft: Playing the odds to build winning stock market trades from options, a description of how I trade, can be read here.

Alerts

Two social media feeds provide notification whenever something new is posted.
Disclaimer
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

Creative Commons 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.Tss s ss'ss

Thursday's Outcomes

I rolled GLD forward to a new expiration.

-- Tim Bovee, Portland, Oregon, Dec. 31, 2015

References

Tradecraft: Playing the odds to build winning stock market trades from options, a description of how I trade, can be read here.

Alerts


Two social media feeds provide notification whenever something new is posted.

Disclaimer
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

Creative Commons 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.

Wednesday, December 30, 2015

Thursday's Prospects

The U.S. bond markets will close at 2 p.m. New York time on Thursday. All U.S. markets will be closed on Friday in observance of New Year's Day.

On Wednesday, Dec. 30:

Of 493 large-cap stocks and exchange-traded funds in my analytical universe, two broke beyond their 20-day price channels, one in either direction.

No symbols giving trading signals survived initial screening.

There are no prospects for trades coinciding with earnings announcements.

Lacking prospects, I shall do no further analysis on Thursday, Dec. 31.

Earnings season begins Jan. 11 when AA publishes results after the closing bell. The higher pace of announcements will continue for about six weeks.

Methodology

The stocks in my analytical universe all have analyst coverage through the stock-ranking company Zacks Investment Research. Not all of the exchange-traded funds are so covered.

I screen the symbols for historical odds of a profitable signal in the direction of the breakout for the past 12 months.

For symbols whose odds of success are in the top or bottom thirds, suggesting a directional or non-directional trade, respectively, I next screen for 1) suitability of the options grid, including open interest of three figures or greater on the strike prices I would need to use to build a position, 2) implied volatility in the 60th percentile or greater of its 12-month range, and 3) the absence of an earnings announcement within the lifespan of the like options series I would trade. For symbols with odds of success in the bottom third, I also screen for low implied volatility, in the 40th percentile or below, suggesting a covered call play.

-- Tim Bovee, Portland, Oregon, Dec. 30, 2015

References

Tradecraft: Playing the odds to build winning stock market trades from options, a description of how I trade, can be read here.

Alerts

Two social media feeds provide notification whenever something new is posted.
Disclaimer
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

Creative Commons 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.Tss s ss'ss

Wednesday's Outcomes

No positions opened and none closed on this eve of New Year's Eve.

-- Tim Bovee, Portland, Oregon, Dec. 30, 2015

References

Tradecraft: Playing the odds to build winning stock market trades from options, a description of how I trade, can be read here.

Alerts


Two social media feeds provide notification whenever something new is posted.

Disclaimer
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

Creative Commons 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.

Tuesday, December 29, 2015

Wednesday's Prospects

On Tuesday, Dec. 29:

Of 493 large-cap stocks and exchange-traded funds in my analytical universe, 19 broke beyond their 20-day price channels, all to the upside.

No symbols giving trading signals survived initial screening.

There are no prospects for trades coinciding with earnings announcements.

Lacking prospects, I shall do no further analysis of potential new positions on Wednesday, Dec. 30.

Earnings season begins Jan. 11 when AA publishes results after the closing bell. The higher pace of announcements will continue for about six weeks.

Methodology

The stocks in my analytical universe all have analyst coverage through the stock-ranking company Zacks Investment Research. Not all of the exchange-traded funds are so covered.

I screen the symbols for historical odds of a profitable signal in the direction of the breakout for the past 12 months.

For symbols whose odds of success are in the top or bottom thirds, suggesting a directional or non-directional trade, respectively, I next screen for 1) suitability of the options grid, including open interest of three figures or greater on the strike prices I would need to use to build a position, 2) implied volatility in the 60th percentile or greater of its 12-month range, and 3) the absence of an earnings announcement within the lifespan of the like options series I would trade. For symbols with odds of success in the bottom third, I also screen for low implied volatility, in the 40th percentile or below, suggesting a covered call play.

-- Tim Bovee, Portland, Oregon, Dec. 29, 2015

References

Tradecraft: Playing the odds to build winning stock market trades from options, a description of how I trade, can be read here.

Alerts

Two social media feeds provide notification whenever something new is posted.
Disclaimer
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

Creative Commons 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.Tss s ss'ss

Tuesday's Outcomes

I entered no new positions and exited no existing positions today, instead spending the time studying and thinking about trading techniques.

-- Tim Bovee, Portland, Oregon, Dec. 29, 2015

References

Tradecraft: Playing the odds to build winning stock market trades from options, a description of how I trade, can be read here.

Alerts


Two social media feeds provide notification whenever something new is posted.

Disclaimer
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

Creative Commons 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.

Monday, December 28, 2015

Tuesday's Prospects

On Monday, Dec. 28:

Of 493 large-cap stocks and exchange-traded funds in my analytical universe, one broke beyond its 20-day price channel, to the upside.

No symbols giving trading signals survived initial screening.

There are no prospects for trades coinciding with earnings announcements.

Lacking prospects, I shall do no further analysis on Tuesday, Dec. 30.

Earnings season begins Jan. 11 when AA publishes results after the closing bell. The higher pace of announcements will continue for about six weeks.

Methodology

The stocks in my analytical universe all have analyst coverage through the stock-ranking company Zacks Investment Research. Not all of the exchange-traded funds are so covered.

I screen the symbols for historical odds of a profitable signal in the direction of the breakout for the past 12 months.

For symbols whose odds of success are in the top or bottom thirds, suggesting a directional or non-directional trade, respectively, I next screen for 1) suitability of the options grid, including open interest of three figures or greater on the strike prices I would need to use to build a position, 2) implied volatility in the 60th percentile or greater of its 12-month range, and 3) the absence of an earnings announcement within the lifespan of the like options series I would trade. For symbols with odds of success in the bottom third, I also screen for low implied volatility, in the 40th percentile or below, suggesting a covered call play.

-- Tim Bovee, Portland, Oregon, Dec. 28, 2015

References

Tradecraft: Playing the odds to build winning stock market trades from options, a description of how I trade, can be read here.

Alerts

Two social media feeds provide notification whenever something new is posted.
Disclaimer
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

Creative Commons 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.Tss s ss'ss

Monday's Outcome

I rolled forward the short leg of my NFLX diagonal.

-- Tim Bovee, Portland, Oregon, Dec. 28, 2015

References

Tradecraft: Playing the odds to build winning stock market trades from options, a description of how I trade, can be read here.

Alerts


Two social media feeds provide notification whenever something new is posted.

Disclaimer
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

Creative Commons 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.

The Art of Rolling

In my mind the weakest element of my trading is the calendar. 

Every options trade comes with a death certificate, the expiration date beyond which the position has no further existence.

And every market tool that I've ever encountered, while often strong in forecasting a direction or a trading range, is thoroughly incompetent at anticipating when market turns will happen.

Those facts add an arbitrary quality to options trading. A position moves into a losing posture with a brief counter-trend correction only to expire days before the correction ends and the now-dead options would, in theory, have returned to profitability.

Rolling is the practice of taking profits (or losses) while keeping a position alive on the books. In practice, it exits the position near expiration and enters a new position resembling the old one in some respects.

The effect is to eliminate the capricious calendar from trade.

Rolls have always been an integral part of time-based strategies, such as covered calls, diagonal and calendar spreads: The long leg used to insure a position has a later end date than does the short leg, providing opportunities for a trader to sell the short leg several times, each time reaping a premium.

Rolls are also possible with other trade constructs, such as verticals or even iron condors. However, I'm finding that these tend to be loss-making. I haven't eliminated vertical and iron condor rolls from my tool-kit yet, although I may well do so in the future.

I described a roll as creating a new position "resembling" the one it replaces, a hugely ambiguous word.

An options position has these elements: Stock symbol, strike prices, options series (which determines expiration), options types (calls or puts), and -- in most cases -- the price relationship between the short and long legs (short higher than long or vice versa). How many of these can be changed before the word "resembling" becomes a mockery of all reason?

There's  no question about diagonals and other time spread. When I roll, I set the new strike price of the short leg one or two strikes out of the money and usually move to a later expiration. The long leg remains the same.

Under my present system I have yet to roll forward a long leg. When I do, the expiration will surely change, and probably the strike price as well. Once that happens, all that will remain of the original position are the underlying stock symbol, the options type (calls), and the relative position of the short and long strikes. The strikes and options series will have changed.

It seems reasonable to me to say that positions sharing 60% of their characteristics resemble each other. It is certainly a closer relationship than that of a parent and his or her child, who shares half of the their genes.

The stock symbol, of course, must remain constant across a roll.

I can't envision a resemblance of options positions that entailed a change in the options types and their positions relative to each other.

For example, a diagonal by definition is composed of call options that are arranged like this: The short leg has a higher strike price than does the long leg. 

Reversing the two would change the structure of the trade into something other than a diagonal spread. Indeed, it would cease to be a time spread since the long leg, through the theta property of the options, would decay more rapidly than the short leg.

Likewise, changing one of the legs from calls to puts would alter the position into something other than a diagonal by eliminating the role of the long leg as placing a limit on the potential loss. It might be a possible tactic, but I see no practical use for it.

So I suspect that my rule for rolling will end up requiring stability across positions for the stock symbol, options type and relative strike position. Everything else likely will be available for adjustment in order to achieve the most advantages trade.

The way I report rolls on Private Trader has proven to be something of a mess. My practice of posting a short update on the trade page with the outcome of trades has proven sufficiently terse and informative, but when a position consists of roll after roll, I end up with a stream of the identical notes that make little sense even to me.

I'm changing that. I shall post an update noting the most recent roll and follow it with a table of all rolls. I've done that with UNG, perhaps the most prolific of rolls among my diagonals, making the edit today. Click here to see it.

I shall make similar edits for other 10 rolled positions as they are rolled or exited entirely.

-- Tim Bovee, Portland, Oregon, Dec. 28, 2015
References

Tradecraft: Playing the odds to build winning stock market trades from options, a description of how I trade, can be read here.

Alerts


Two social media feeds provide notification whenever something new is posted.

Disclaimer
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

Creative Commons 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.

Sunday, December 27, 2015

The Week Ahead: A Week of No Significance

I once read a book with the subtitle, "A Year of No Significance". A similar subtitle could be used to describe the week to come, with no potential market-movers among the handful of economic reports lined up for release.

And even if there were, who would be there to trade? I imagine Wall Street as a ghost town, populated only by interns sailing pizza tins across the desks of the bull pens, occasionally pausing to place incomprehensible orders with the markets.

Markets are closed on Friday for the New Year's holiday. The bond markets close two hours early, at 2 p.m. New York time, on Thursday, New Year's Eve.

Leading indicators (in descending order of importance):

The interest rate spread between 10-year Treasuries and the federal funds rate, reported continually during market hours.

The M2 money supply, at 4:30 p.m. Friday.

The S&P 500 index, reported continually during market hours.

Average weekly initial claims for unemployment from the jobless claims report on Wednesday at 8:30 a.m.

Events arranged by day:

Monday: Dallas Federal Reserve manufacturing survey at 10:30 a.m.

Tuesday: The S&P Case-Shiller home price index for 20 metropolitan areas at 9 a.m. and consumer confidence at 10 a.m.

Wednesday: Pending home sales at 10 a.m. and petroleum inventories at 10:30 a.m.

ThursdayJobless claims at 8:30 a.m.,  the Chicago Purchasing Managers index at 9:45 a.m., U.S. bond markets close at 2 p.m. and the M2 money supply at 4:30 p.m.

Friday: U.S. markets closed

I also keep an eye on the Baltic Dry Index, updated daily, and the 5-year implied inflation rate based on U.S. Treasury yields, which presently stands at 1.41%, up 0.14% from a week earlier.

Treasury Debt

Bills
  • 4-week: Announcement Monday 11 a.m., auction Tuesday 11:30 a.m., settlement Thursday.
  • 3-month: Auction Monday 11:30 a.m., announcement Thursday 11 a.m.
  • 6-month: Auction Monday 11:30 a.m., announcement Thursday 11 a.m.
  • 52-week: Announcement Thursday 11 a.m.
Notes
  • 2-year: Auction Monday 1 p.m., settlement Thursday.
  • 5-year: Auction Tuesday 1 p.m., settlement Thursday.
  • 7-year: Auction Wednesday 1 p.m., settlement Thursday.
Bonds
  • None.
TIPS
  • 5-year: Settlement Thursday.
Fedsters

In my imagination, the Fed glitterati are out shopping for fine champagne to toast the end of a year that saw the economy strengthen to a point that allows them to begin returning the interest-rates to their normal relationship with inflation.

Analytical universe

This week I shall be analyzing new trading signals from among 493 large-cap stocks and exchange-traded funds.

Happy New Year, and good trading!



-- Tim Bovee, Portland, Oregon, Dec. 27, 2015

References


Tradecraft: Playing the odds to build winning stock market trades from options, a description of how I trade, can be read here.

Alerts


Two social media feeds provide notification whenever something new is posted.
Disclaimer
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

Creative Commons License

All content on Tim Bovee, Private Trader by Tim Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com

Saturday, December 26, 2015

Monday's Prospects

On Thursday, Dec. 24:

Of 493 large-cap stocks and exchange-traded funds in my analytical universe, four broke beyond their 20-day price channels, all to the upside.

No symbols giving trading signals success survived initial screening.

There are no prospects for trades coinciding with earnings announcements.

With no prospects, I shall do no further analysis of potential new positions on Monday, Dec. 28.

Earnings season begins Jan. 11 when AA publishes results after the closing bell. The higher pace of announcements will continue for about six weeks.

Methodology

The stocks in my analytical universe all have analyst coverage through the stock-ranking company Zacks Investment Research. Not all of the exchange-traded funds are so covered.

I screen the symbols for historical odds of a profitable signal in the direction of the breakout for the past 12 months.

For symbols whose odds of success are in the top or bottom thirds, suggesting a directional or non-directional trade, respectively, I next screen for 1) suitability of the options grid, including open interest of three figures or greater on the strike prices I would need to use to build a position, 2) implied volatility in the 60th percentile or greater of its 12-month range, and 3) the absence of an earnings announcement within the lifespan of the like options series I would trade. For symbols with odds of success in the bottom third, I also screen for low implied volatility, in the 40th percentile or below, suggesting a covered call play.

-- Tim Bovee, Portland, Oregon, Dec. 26, 2015

References

Tradecraft: Playing the odds to build winning stock market trades from options, a description of how I trade, can be read here.

Alerts

Two social media feeds provide notification whenever something new is posted.
Disclaimer
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

Creative Commons 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.Tss s ss'ss

Thursday, December 24, 2015

Thursday's Outcomes

I analyzed WMT but declined the trade.

-- Tim Bovee, Portland, Oregon, Dec. 24, 2015

References

Tradecraft: Playing the odds to build winning stock market trades from options, a description of how I trade, can be read here.

Alerts


Two social media feeds provide notification whenever something new is posted.

Disclaimer
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

Creative Commons 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.

WMT Analysis

The retail chain Wal-Mart Stores Inc. (WMT), headquartered in Bentonville, Arkansas, closed above its 20-day price channel on Wednesday. With low historical odds of success and low implied volatility relative to its one-year range, WMT is a candidate for a time spread.

[WMT in Wikipedia]

WMT

I shall use the FEB series of options, which trades for the last time 58 days hence, on Feb. 20.

Ranges

Implied volatility stands at 18%, which is 1.2 times the VIX, a measure of volatility of the S&P 500 index. WMT’s volatility stands in the 27th percentile of its annual range.

Ranges implied by options and earnings
WeekSD1 68.2%SD2 95%Earns
Upper65.3069.73N/A
Lower56.4251.99N/A
Gain/loss7.3%14.6%
Implied volatility 1 and 2 standard deviations; maximum earns move

The Trade

WMT has completed four bull signals in the past year, one of them a winner, yielding 7.0% over 81 days. The three unsuccessful signals lost 5.4% over 12 days. The success rate is 25%.
The stock has been in a downtrend since January and is presently in a counter-trend correction to the upside from its low of Nov. 13.

Diagonal spread, long the $60 calls expiring Jan. 20, 2017
and short the $62.50 calls expiring Feb. 20, 2016
bought with a credit.
Probability of expiring out-of-the-money

StrikeOTM
JAN176057.3%
FEB1662.568.9%

The premium on the long leg is a $4.48 debit and on the short leg, a $0.91 credit, for a net entry debit of $3.03.

Decision for My Account

I'm declining to take the trade.

At my benchmark $500 sizing of a hypothetical trade (in this case assessed in comparison to the long-leg debit), the position would be one contract and the short-leg credit would be $91. My rule is to exit when profit has reached half of its potential and, at a $500 sizing, I aim for a take home at least $100 per trade, the potential win is too small to interest me.

A smaller debit on the long leg would be possible if I could use an earlier expiration, such as August, six months out from the short leg. But the structure of the options grid won't allow that at this point.

-- Tim Bovee, Portland, Oregon, Dec. 24, 2015

References

Tradecraft: Playing the odds to build winning stock market trades from options, a description of how I trade, can be read here.


Elliott wave analysis tracks patterns in price movements. StockCharts has a good explainer. The principal practioner of Elliott wave analysis is Robert Prechter at Elliott Wave International. His book, Elliott Wave Principle, is a must-read for people interested in this form of analysis, as is his most recent publication, Visual Guide to Elliott Wave Trading

Alerts


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Disclaimer
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

Creative Commons 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.

Thursday's Agenda

U.S. stock markets close three hours early at 1 p.m. New York time.

I have one prospect on my desk this morning: A time spread on WMT. I shall post an analysis shortly.

-- Tim Bovee, Portland, Oregon, Dec. 24, 2015

References

Tradecraft: Playing the odds to build winning stock market trades from options, a description of how I trade, can be read here.

Alerts


Two social media feeds provide notification whenever something new is posted.

Disclaimer
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

Creative Commons 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.

Wednesday, December 23, 2015

Thursday's Prospects

U.S. stock markets close three hours early on Thursday, at 1 p.m. New York time.

On Wednesday, Dec. 23:

Of 484 large-cap stocks and exchange-traded funds in my analytical universe, 15 broke beyond their 20-day price channels, all to the upside.

No symbols giving trading signals with high odds of success survived initial screening. High-odds symbols are candidates for directional trades.

One symbol with a trading signal having low odds of success survived initial screening, having broken out to the upside. Low-odds symbols are candidates for non-directional trades and time spreads.

There are no prospects for trades coinciding with earnings announcements.

I shall do further analysis on Thursday, Dec. 24.

Earnings season begins Jan. 11 when AA publishes results after the closing bell. The higher pace of announcements will continue for about six weeks.

Trading signal survivors

High-odds
Bull
(none)

High-odds
Bear
(none)

Low-odds
Bull
WMT

Low-odds
Bear
(none)

Methodology

The stocks in my analytical universe all have analyst coverage through the stock-ranking company Zacks Investment Research. Not all of the exchange-traded funds are so covered.

I screen the symbols for historical odds of a profitable signal in the direction of the breakout for the past 12 months.

For symbols whose odds of success are in the top or bottom thirds, suggesting a directional or non-directional trade, respectively, I next screen for 1) suitability of the options grid, including open interest of three figures or greater on the strike prices I would need to use to build a position, 2) implied volatility in the 60th percentile or greater of its 12-month range, and 3) the absence of an earnings announcement within the lifespan of the like options series I would trade. For symbols with odds of success in the bottom third, I also screen for low implied volatility, in the 40th percentile or below, suggesting a covered call play.

-- Tim Bovee, Portland, Oregon, Dec. 23, 2015

References

Tradecraft: Playing the odds to build winning stock market trades from options, a description of how I trade, can be read here.

Alerts

Two social media feeds provide notification whenever something new is posted.
Disclaimer
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

Creative Commons 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.Tss s ss'ss

Wednesday's Outcomes

I exited ORCL for a profit.

-- Tim Bovee, Portland, Oregon, Dec. 23, 2015

References

Tradecraft: Playing the odds to build winning stock market trades from options, a description of how I trade, can be read here.

Alerts


Two social media feeds provide notification whenever something new is posted.

Disclaimer
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

Creative Commons 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.

Tuesday, December 22, 2015

Wednesday's Prospects

On Tuesday, Dec. 22:

Of 484 large-cap stocks and exchange-traded funds in my analytical universe, three broke beyond their 20-day price channels, all to the upside.

No symbols giving trading signals survived initial screening,

There are no prospects for trades coinciding with earnings announcements.

With no prospects, I shall do no further analysis of potential new trades on Wednesday, Dec. 23.

Earnings season begins Jan. 11 when AA publishes results after the closing bell. The higher pace of announcements will continue for about six weeks.

Methodology

The stocks in my analytical universe all have analyst coverage through the stock-ranking company Zacks Investment Research. Not all of the exchange-traded funds are so covered.

I screen the symbols for historical odds of a profitable signal in the direction of the breakout for the past 12 months.

For symbols whose odds of success are in the top or bottom thirds, suggesting a directional or non-directional trade, respectively, I next screen for 1) suitability of the options grid, including open interest of three figures or greater on the strike prices I would need to use to build a position, 2) implied volatility in the 60th percentile or greater of its 12-month range, and 3) the absence of an earnings announcement within the lifespan of the like options series I would trade. For symbols with odds of success in the bottom third, I also screen for low implied volatility, in the 40th percentile or below, suggesting a covered call play.

-- Tim Bovee, Portland, Oregon, Dec. 22, 2015

References

Tradecraft: Playing the odds to build winning stock market trades from options, a description of how I trade, can be read here.

Alerts

Two social media feeds provide notification whenever something new is posted.
Disclaimer
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

Creative Commons 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.Tss s ss'ss

Monday, December 21, 2015

Tuesday's Prospects

On Monday, Dec. 21:

Of 484 large-cap stocks and exchange-traded funds in my analytical universe, three broke beyond their 20-day price channels, two to the upside and one to the downside.

No symbols giving trading signals survived initial screening.

There are no prospects for trades coinciding with earnings announcements.

With no prospects, I shall do no further analysis of potential new positions on Tuesday, Dec. 22.

Earnings season begins Jan. 11 when AA publishes results after the closing bell. The higher pace of announcements will continue for about six weeks.

Methodology

The stocks in my analytical universe all have analyst coverage through the stock-ranking company Zacks Investment Research. Not all of the exchange-traded funds are so covered.

I screen the symbols for historical odds of a profitable signal in the direction of the breakout for the past 12 months.

For symbols whose odds of success are in the top or bottom thirds, suggesting a directional or non-directional trade, respectively, I next screen for 1) suitability of the options grid, including open interest of three figures or greater on the strike prices I would need to use to build a position, 2) implied volatility in the 60th percentile or greater of its 12-month range, and 3) the absence of an earnings announcement within the lifespan of the like options series I would trade. For symbols with odds of success in the bottom third, I also screen for low implied volatility, in the 40th percentile or below, suggesting a covered call play.

-- Tim Bovee, Portland, Oregon, Dec. 21, 2015

References

Tradecraft: Playing the odds to build winning stock market trades from options, a description of how I trade, can be read here.

Alerts

Two social media feeds provide notification whenever something new is posted.
Disclaimer
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

Creative Commons 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.Tss s ss'ss

Monday's Outcomes

I exited CCL for  profit.

I rolled forward the short leg of my GM diagonal to a new strike price and expiration.

-- Tim Bovee, Portland, Oregon, Dec. 21, 2015

References

Tradecraft: Playing the odds to build winning stock market trades from options, a description of how I trade, can be read here.

Alerts


Two social media feeds provide notification whenever something new is posted.

Disclaimer
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

Creative Commons 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.

Sunday, December 20, 2015

The Week Ahead: GDP, durables, income, real estate

A snow shower of economic reports dusts the trading week, which is shortened in New York, London and Sydney by the Christmas holiday on Friday, when markets are closed. U.S. markets will close early on Thursday, at 1 p.m. New York time. In Japan, markets will be open, but everything is winding down for the extended New Year's holiday.

The third revision of the 3rd quarter gross domestic product will be published on Tuesday at 8:30 a.m. The second revision a month ago came in at an annual rate of up 2.1%. Any significant impact from the month-ago number will have market impact, especially insofar as it gives insight to the Federal Open Market Committee's decision-making on further tightening.

Look for durable goods orders and personal income and outlays, both on Wednesday at 8:30 a.m., and for two real estate reports, existing home sales on Tuesday and new home sales on Wednesday, each at 10 a.m.

Leading indicators (in descending order of importance):

The interest rate spread between 10-year Treasuries and the federal funds rate, reported continually during market hours.

The M2 money supply, at 4:30 p.m. Friday.

The S&P 500 index, reported continually during market hours.

Average weekly initial claims for unemployment from the jobless claims report on Wednesday at 8:30 a.m.

The index of consumer expectations from the Reuters/University of Michigan consumer sentiment report on Wednesday at 10 a.m.

Events arranged by day:

Tuesday: GDP at 8:30 a.m. and existing home sales at 10 a.m.

Wednesday: Durable goods orders and personal income and outlays at 8:30 a.m., new home sales and consumer sentiment at 10 a.m. and petroleum inventories at 10:30 a.m.

ThursdayJobless claims at 8:30 a.m., U.S. markets close at 1 p.m. and the M2 money supply at 4:30 p.m.

Friday: U.S. markets closed

I also keep an eye on the Baltic Dry Index, updated daily, and the 5-year implied inflation rate based on U.S. Treasury yields, which presently stands at 1.27%, up 0.4% from a week earlier.

Treasury Debt

Bills
  • 4-week: Announcement Monday 11 a.m., auction Tuesday 11:30 a.m., settlement Thursday.
  • 3-month: Auction Monday 11:30 a.m., announcement Thursday 11 a.m.
  • 6-month: Auction Monday 11:30 a.m., announcement Thursday 11 a.m.
Notes
  • 2-year: Announcement Thursday 11 a.m.
  • 2-year fixed rate: Auction Wednesday 11:30 a.m.
  • 5-year: Announcement Thursday 11 a.m.
  • 7-year: Announcement Thursday 11 a.m.
Bonds
  • None.
TIPS
  • None.
Fedsters

Silence, as the Federal Reserve glitterati finish up their holiday preparations, busily laboring in the kitchen amid the stimulating smells of bubbling pies made from the tasty apple and the crispy pecan.

Analytical universe

This week I shall be analyzing new trading signals from among 484 large-cap stocks and exchange-traded funds.

Good trading!



-- Tim Bovee, Portland, Oregon, Dec. 20, 2015

References


Tradecraft: Playing the odds to build winning stock market trades from options, a description of how I trade, can be read here.

Alerts


Two social media feeds provide notification whenever something new is posted.
Disclaimer
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

Creative Commons License

All content on Tim Bovee, Private Trader by Tim Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com

Saturday, December 19, 2015

Saturday's Outcomes

Two iron condor positions came to an end on Saturday: GNC and JD.

Also, I exited the long leg of my covered call on BX, wrapping up the entire position.

-- Tim Bovee, Portland, Oregon, Dec. 19, 2015

References

Tradecraft: Playing the odds to build winning stock market trades from options, a description of how I trade, can be read here.

Alerts


Two social media feeds provide notification whenever something new is posted.

Disclaimer
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

Creative Commons 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.

Monday's Prospects

On Friday, Dec. 18:

Of 490 large-cap stocks and exchange-traded funds in my analytical universe, 26 broke beyond their 20-day price channels, one to the upside and 25 to the downside.

No symbols giving trading signals survived initial screening.

There are no prospects for trades coinciding with earnings announcements.

With no prospects, I shall do no further analysis of potential new positions on Monday, Dec. 21.

Earnings season begins Jan. 11 when AA publishes results after the closing bell. The higher pace of announcements will continue for about six weeks.

Methodology

The stocks in my analytical universe all have analyst coverage through the stock-ranking company Zacks Investment Research. Not all of the exchange-traded funds are so covered.

I screen the symbols for historical odds of a profitable signal in the direction of the breakout for the past 12 months.

For symbols whose odds of success are in the top or bottom thirds, suggesting a directional or non-directional trade, respectively, I next screen for 1) suitability of the options grid, including open interest of three figures or greater on the strike prices I would need to use to build a position, 2) implied volatility in the 60th percentile or greater of its 12-month range, and 3) the absence of an earnings announcement within the lifespan of the like options series I would trade. For symbols with odds of success in the bottom third, I also screen for low implied volatility, in the 40th percentile or below, suggesting a covered call play.

-- Tim Bovee, Portland, Oregon, Dec. 19, 2015

References

Tradecraft: Playing the odds to build winning stock market trades from options, a description of how I trade, can be read here.

Alerts

Two social media feeds provide notification whenever something new is posted.
Disclaimer
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

Creative Commons 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.Tss s ss'ss