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Showing Posts 1 - 15 out of 52 found.

Unusual Option Activity, A Leverage Play

Unusual Option Activity, A Leverage Play

Over the past 18 months or so, I have discussed Unusual Option Activity (UOA) at length.  My analysis, quite frankly, has not proven UOA to be any sort of panacea.  Should I just ignore it?  I don't think so.  Like most things, the truth is not clear cut.  I have proven, at least to myself that blindly following UOA is a random walk at best.  But there are instances where it can lead to...

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Netflix Is Worth A Look

Netflix Is Worth A Look

Earnings gaps to the downside can provide a significant amount of technical damage to stocks. This kind of damage takes weeks or even months to repair, and you can use this to your advantage in the options market. After trading in a six-month range, NFLX had a massive gap down of over 100 points. Since then the sellers have cleared out, leading to a slow grind higher. What we are seeing as...

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A Play on Facebook’s Earnings

A Play on Facebook’s Earnings

Facebook (Nasdaq: FB, 80.77) is scheduled to report earnings after Tuesday’s closing bell.  FB share are up over 26% year to date, with one market commentator saying, “I’ve never seen a stock want to get to $100 so badly as FB.” There’s also the much talked about “80-120 rule,” which says in a bull market, stocks that hit $80 tend to hit $100, and stocks that make it to $100 tend to rally to...

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Options 101: How To Construct A Directional Play

Options 101: How To Construct A Directional Play

When I identify an opportunity for a directional play, how do I decide: a) what type of trade I want to do and b) what strikes do I want to use?  Typically, with a directional play, I look for some sort of vertical.  This lowers my cost basis (granted it caps my potential profit).  But most importantly, I attempt to "target" a specific strike.  I do this by "triangulating" a few...

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Skew: Did Option Players Get The Sell-Off Right This Time?

Skew: Did Option Players Get The Sell-Off Right This Time?

If you want to figure out the next move the markets will make, I have a secret to tell you about. Option traders have a trick that most investors and traders have never heard of, let alone understand. It is a little thing called skew, which is a real time view of where money is being bet. (In technical terms, skew is "the risk associated with an increase in the probability of outlier...

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Define Risk On Crude Oil Play With Options

Define Risk On Crude Oil Play With Options

The markets have calmed down a bit from last week, but there is still a cloud of uncertainty hanging overhead. The equity markets have done quite a job of getting back most of the recent sell off. Last week the S&P 500 had a nearly 120 point range from Monday to Thursday, with a 50 point range on Thursday alone. The market closed up 30 points from the low on Thursday, which may have...

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10 Facts About The Facebook Chart

10 Facts About The Facebook Chart

If you’re like me, you are probably on Facebook (FB) often checking updates on friends and family. FB is an incredibly fun stock to trade. It is quite volatile and in my opinion, has some serious moves left in it.  Here are 10 facts about the FB chart. #1 On October 22, 2014 FB made an all-time high of $79.85. #2 The $79 price range is where FB experienced some strong selling pressure just...

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Trading Psychology: Stay Calm When The Fastballs Fly

Trading Psychology: Stay Calm When The Fastballs Fly

A client of mine sent me a bio yesterday on Rod Dedeaux, who was the baseball coach for USC for 45 seasons. Dedeaux was a legendary leader, chalking up more national titles and wins (1332) than any other coach of his day. 200 of his players went on to play professional ball. Dedeaux neither lost his temper nor disrespected or denigrated anyone. He cultivated the ability to befriend,...

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Alibaba: Look For The "Shake And Bake" Setup

Alibaba: Look For The "Shake And Bake" Setup

It was "the" IPO to own this year.You know how you get those "Oriental Trading" magazines in the mail? Where you can buy 250 bouncy balls for 5 bucks?Alibaba is like that, except on a massive scale.And after all that IPO hype, the stock ran from 100 the first day it traded and has fallen into a range since.This chart is a classic IPO base and break pattern. 90 is an obvious level that if...

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Earnings Play: VMWare Inc. Poised For Big Move

Earnings Play: VMWare Inc. Poised For Big Move

VMWare Inc. (VMW) is scheduled to report earnings after Tuesday’s closing bell.  Headquartered in Palo Alto, CA, this company specializes in cloud and software virtualization services.  VMW Share are down slightly over 2% in 2014, but are off nearly 21% from their April 1 high of $111.83.  The stock has traded in a 52-week range of $76.51-$112.89.Analysts are calling $1.5 billion in revenue...

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E-Mini Trade: Get Ready For Another Round Of Volatility

E-Mini Trade: Get Ready For Another Round Of Volatility

If you chose to read this commentary today, I have a feeling you are a survivor of the events of the last few days.  Your portfolio may have taken a hit, but you are probably still standing in upright stable position. Congratulations to you. Now get ready for another round of volatility. If you have been paying attention to the markets and the surrounding news I’m guessing you caught some...

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APD: Unusual Options Activity And Charts Signal Bottom

APD: Unusual Options Activity And Charts Signal Bottom

Air Products & Chemicals (APD) is a $27 billion industrial gas supplier headquartered in Allentown, Pennsylvania. They hired Seifi Ghasemi to take on the chairman and CEO role this summer, following more than a decade in the same position at Rockwood Holdings (ROC). In September they announced the company will be reorganizing by geography instead of divisions by products. This could...

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4 Key Trading Lessons From The Beach

4 Key Trading Lessons From The Beach

Winter is approaching so I had to make sure to enjoy one more beach day. Hard to do in Nashville, TN though. That being said, we took a short, eight-hour drive to Panama City to visit my girlfriend’s family and, of course, get some serious beach time in.  You might think it’s a stretch to relate snorkeling to trading. Well, only one way to find out. #1 Gear: When trading, you do have to...

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Earnings Play: Trade Intel From The Long Side

Earnings Play: Trade Intel From The Long Side

Intel Corporation (INTC) is scheduled to report earnings after the closing bell on Tuesday.  Consensus analyst forecast $14.45 billion of revenue with an EPS of $0.65 (last quarter’s EPS beat by nearly 6%, with the stock rallying over 9%).  Market Recap Indeed, shares have been seemingly unstoppable in 2014, having rallied 22% year to date.  The stock has traded in a 52-week range of...

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Volatile Markets Are Tripping Everyone Up

Volatile Markets Are Tripping Everyone Up

It's been quite a week of action.   Monday was a sign that Tuesday could be nasty and indeed it was. Selling was concentrated and every rally in the early going was sold until any buyers just threw in the towel.  The drop had many concerned the prior lows would be breached, after the Russell 2000 already did that.  The options market showed a preponderance of puts being bought, many looking...

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