Tuesday, March 1, 2016

Tuesday's Agenda

I reserve three analytical assessments for the day of a potential trade, since they can both be volatility:
  • Implied volatility as a percentile of the most recent range, which must be at 60% or higher, 
  • a bid/ask spread as a percentage for front-month at the money calls in the single digits, 
  • and triple-digit open interest on the strike prices for the range I might use to trade, generally out to odds of closing out-of-the-money up to 85%.
My one prospect for today, an earnings play on ROST, meets the implied volatility criteria, although barely, with IV in the 60th percentile

However, the bid/ask spread is too high, at 12%, and triple-digit open interest on puts stretches only to the strike having a 77% chance of being out of the money at expiration.

One failure alone disallows a trade, and ROST has failed on two points.

I shall do no further analysis of the symbol and have no plans to pursue new positions today. I shall be looking for opportunities to exit current holdings, and if any occur, I'll report them in an Outcomes post near the close.

-- Tim Bovee, Portland, Oregon, March 1, 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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