Thursday, March 17, 2016

Thursday's Agenda

I have one prospect my desk this morning, a potential earnings play on ADBE.

However, the symbol's implied volatility is low, at the 36th percentile of its most recent range. My guidelines require volatility in the 60th percentile or higher.

It's not just ADBE. The markets in general are in a period of low volatility, which creates a difficult trading environment for the strategies I use, The VIX, which tracks the volatility of the S&P 500, is at 14.81, in the 10th percentile of its most recent range, which began at a low of 12.80 on Oct. 28, 2015 and peaked at 32.09 on Jan. 20.

There have been times when I've tried low volatility strategies, such as covered calls or diagonal spread. They've not worked out well, so my strategy this season is to wait out the low IV period. There is nothing in the Official Private Trader's Handbook that requires to me to take on a sketchy trade just because there's nothing else available.

So, I shall not proceed with a full analysis of ADBE. I'll keep an eye on it today, and in the very unlikely chance that volatility rises sufficiently to support a trade,then I'll jump in with the analysis.

-- Tim Bovee, Portland, Oregon, March 17, 2016


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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