Monday, April 4, 2016

Monday's Agenda

Two prospects lie on my desk this morning, DRI and WBA. Neither has passed final analysis, and I shall toss them away and plan no further consideration of new positions today.

DRI failed because of a week options grid for my current trading series, the MAY options. Most strike prices have open interest in the single digits for calls and the double digits for puts. I require triple-digit open interest in order to ensure sufficient liquidity for a good fill
WBA failed because of low implied volatility relative to its most recent range. Volatility stands in the 32nd percentile; I require 60th percentile or greater.

Low implied volatility has been endemic the past few months. Even with SPY, the exchange-traded fund that tracks the S&P 500, and also the most liquid symbol in the world, has implied volatility that today dropped below its prior low.

SPY's volatility now stands in the 8th percentile of its range.

This is a problem. It has brought my trading to a near standstill and calls into question the viability of my current strategy as a mainstay of my trading.

Trading strategies must always be questioned in the light of new events, and modified in light of new conditions. That need for questioning is the nature of the markets today.

-- Tim Bovee, Portland, Oregon, April 4, 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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