Monday, September 28, 2015

Tuesday's Prospects

On Monday, Sept. 28:

Of 486 large-cap stocks and exchange-traded funds in my analytical universe, 59 broke beyond their 20-day price channels, all to downside.

No symbols giving trading signals survived initial screening. The one finalist, a low odds high implied volatility bear signal from LEN, disqualifies because I already I have an iron condor on the position. See the analysis here. I shall consider LEN for a roll forward upon exit.

There are no prospects for trades coinciding with earnings announcements under my Volatility Rules.

With no survivors, I shall do no further analysis from these pools on Tuesday, Sept. 29.

The next earnings season begins Oct. 8, with peak announcements lasting for three weeks. Under the exclusion rule that forbids me from opening new positions in stocks within 30 days of an earnings announcement, in month before the season begins increasing numbers of symbols will be removed from my prospective trades list during initial screening. The rule doesn't apply to trades under my Volatility Rules.


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, 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 greater than the 60th percentile of its 12-month range, and 3) the absence of an earnings announcement within the lifespan of the like options series I would trade; presently the NOV options, trading for the last time on Nov. 20.

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


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