Monday, May 11, 2015

Monday's Agenda

Of the 15 symbols that made it past the early rounds of analysis, NXPI and NVDA came closest to making it past the finish line. But even they stumbled in the end.

The problem lies more in strategy I'm using these days, rather than in the symbols themselves.

I'm trading very short term short vertical spreads, sold for a credit and expiring about a week after the trade.

The conventional wisdom is that that strategy produces better results when the symbol has high implied volatility. NXPI and NVDA both have low volatility. So, I have struck them from the list of contenders and plan no further analysis.

Of the other symbols, seven failed confirmation by moving back within their 20-day price channels. They are MPC, WY, EWP, DIA, MNST, MON and SAN.

Six had insufficient open interest on their options to provide the liquidity needed for such trades: AON, CME, LO, HSP MGA and ACN.

Since there were also no potential earnings plays on the schedule today, I plan no analyses, and shall instead spend my time in study and contemplation.

Earlier in this post I wrote I cited the "conventional wisdom" as a basis for requiring high implied volatility. And indeed that is what the conventional wisdom says.

But is it true?  That question and others are the subject of a study I'm working on, looking at the characteristics of earnings plays I've analyzed this season to try to understand what's really correlates with profitable outcomes, and what sort of position management is more likely to produce big profits and small losses. I'll be spending the day trying to push that project through to completion.

-- Tim Bovee, Portland, Oregon, May 11, 2015


My volatility trading rules can be read here.


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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.

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Based on a work at s ss'ss

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