Trades in Stock Options. Receive daily trade recommendations. Can you imagine discovering a way to trade that promises instant income? If you think such a method is impossible, think again. It is definitely achievable, and everything you need to know is available online for one low price that includes special three-part online webinars.
Ambush is a time-proven mean-reversion day trading System focused on a variety of Futures markets around the globe. With Ambush Signals you can now easily follow the Ambush System on a subscription basis for educational purposes.
If you didn't fail early in your trading business, then you have probably been around long enough to realize that many of the problems you encounter as a trader are those that derive from your own individuality. Such problems are common among traders and, in fact, common among all human beings. Seeking spiritual help from a power much greater than your own is the area I address in the "Spiritual Side of Trading".
I received a complaint saying that whenever I give a spread trade in Chart Scan, I always show one that is already working. So, let’s look at a spread that is coming up soon, one you might look for. The trade is an intra-market spread in the gasoline futures.
Here’s what makes this spread work: Consumption of gasoline is lowest in winter, when driving conditions are worst, and highest in summer, when school is out, people are on vacation, and driving conditions are best.
During February, gasoline refineries retool --- shutting down for maintenance and preparing to maximize gasoline production. From that point in time, demand for gasoline begins to grow as the industry rebuilds depleted inventories in time for the traditional opening of the US vacation and driving season (Memorial Day, the last Monday in May). That growth is further accelerated by a need to actually replace inventories along the Eastern Seaboard with gasoline reformulated to meet seasonally more stringent environmental standards. (For example, gasoline deliverable against March futures is unacceptable for delivery against April-September contracts). In this situation, price precedes consumption.
Intensifying pressure to meet accelerating demand during the transition from low inventory/low consumption to high consumption drives futures prices and bull spreads.
In fact, the Long June/Short September Gasoline spread typically closes higher in the June contract around May 3 than around April 9, about 93% of the time. You’ll want to enter this trade from 1-10 days prior to April 9.
On 5th March 2019 we gave our Instant Income Guaranteed subscribers the following trade on Glu Mobile Inc. (GLUU). Price insurance could be sold as follows:
On 8th March 2019, on a GTC order, we sold to open GLUU Jun 21 2019 6P @ 0.15, with 102 days until expiration with our short strike about 35% below price action.
On 26th March 2019, we bought to close GLUU Jun 21 2019 6P @ 0.05, after 18 days in the trade as GLUU shot up about 30% after our entry.
Profit: 10$ per option
Margin: 120$
Return on Margin annualized: 168.98%
Philippe
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Once you get into a trade, you must eventually get out. Some argue that this is more important than where you get into a trade. My experience has been…read more.
Andy Jordan is the editor for Traders Notebook which shows you Futures Trading Strategies in Spreads, Options, and Swing Trades. Learn step-by-step how to trade successfully.
Is Natural Gas back to normal?! Ambush traders have one of their cash cows back!
The Ambush trading method is specialised in catching intraday market tops and bottoms in a variety of Futures markets. Including the Natural Gas Future (NG) traded at the CME, where Ambush Traders are cashing in again lately.
Ambush day trades on an end-of-day basis so there’s no need to even check the markets during the day.
Towards the end of 2018, fundamental news caused prices in Natural Gas to go crazy with volatility levels almost 10 times above normal. This didn’t just put various funds out of business but also caused most Ambush traders to stay away from NatGas for a while.
Right now NG is trading pretty much where it traded before the hype and looks much more like the NatGas market we are used to again.
As you can see on the chart below it moves in boxes and has a lot of false intraday breakouts, perfect conditions again for Ambush:
With NatGas behaving normal again, Ambush results look great again too.
Here’s the result of all of these trades, trading one Natural Gas (NG) contract, including $10 commissions/slippage per trade:
Now if you’ve been the one making money on the crazy up-move just ask yourself how often that actually happens and if you wouldn’t rather be making money the other 95% of the time ;)
With Ambush Signals you can easily follow Ambush, a system specialized in catching intraday market tops and bottoms in the Futures markets!
The most popular and easiest way to follow Ambush is Ambush Signals. It does all the work for you, allows you to customise what markets you want to see and has a position sizing tool implemented to automatically adjust the positions to your risk preferences.
Each day around 6:30 pm NY Time the Signals are available for you on the Dashboard. You can then place your orders and literally walk away until the next market close! To find out more about the details of Ambush and how Ambush Signals works, have a look at the Ambush Signals Website.
Let’s be realistic. Following any System can be tough, especially in the beginning. It simply needs time to build the confidence needed to make it through inevitable drawdowns. So what if you are unlucky and don’t catch a good start right away?
I want you to succeed trading Ambush Signals, so here’s something for you that will strongly increase your odds of success and allow you to easily gain the confidence you’ll need to become a long-term profitable Ambush trader.
Did you come up with questions? Don't be shy, email Marco Mayer, he wants to hear from you! This email address is being protected from spambots. You need JavaScript enabled to view it.
To view previous published Chart Scan newsletters, please log in or click on "Join Us,"
shown above, to subscribe to our free "Members Only" section.
A WEALTH OF INFORMATION & EDUCATION:
Joe Ross-Trading Educators' popular free Chart Scan Newsletter has been published since 2004.
Note: Unless otherwise noted, all charts used in Chart Scan commentary were created
by using Genesis Financial Technologies' Trade Navigator (with permission).
Legal Notice and Copyright 2019 Disclaimer - Published by Trading Educators, Inc.
Chart Scan is a complimentary educational newsletter.
Hey Joe! What is a golden cross? Can you give me an example?
A Golden Cross occurs when the 50-day moving average rises to meet and cross the 200-day moving average. I suggest that we may soon see a Golden Cross take place in the gold market. I think that the bearish gold cycle that took the most significant part of 2018 may have ended in mid-October 2018. The outlook is much more bullish, and we are entering now an upbeat gold environment and so, a possible bright future for gold in 2019. I am supporting my thoughts on the final crossing of the $1,250 per Oz resistance experienced last year, which is an essential technical bullish confirmation.
This crossing led me to predict that gold is about to form a "golden cross" during the first quarter of 2019 as shown in the chart below:
How well have you been doing in the markets these days? There have been many opportunities in the past few weeks, but an abundance of market opportunities, don't always guarantee success. Setbacks can be the rule rather than the exception when it comes to trading. Discovering reliable trading strategies is a challenge, and frequently, a promising strategy produces a series of losses, especially under new market conditions. Losses and other setbacks can be frustrating and anxiety provoking. If you are expecting to win because the markets have been showing new highs, you can feel especially frustrated when you don't meet your expectations. As much as you don't want to be fazed by these setbacks, it can be difficult. When you face setback after setback, it can be hard to pick yourself up. It's tempting to give into the frustration and feel beaten by the pressure. The only way to make it, however, is to pick yourself up and keep trading the markets with a fighting spirit.
In order to keep up a fighting spirit, it is vital to have high frustration tolerance: No matter how many setbacks you face, you must keep going. Maintaining a fighting spirit is largely a matter of having the proper mindset. People with low frustration tolerance tend to believe that they should never experience a setback and that if they experience a setback, it is impossible to overcome it. But this mindset will get you stuck rather than moving ahead. It is essential to constantly remind yourself that setbacks are a natural part of life. Indeed, if you are trying to succeed at trading, you should expect setbacks. Instead of dreaded events, challenges and setbacks can be viewed as part of the excitement and stimulation of living. When you face a setback while trading, you should view it as an opportunity to learn and develop your trading skills rather than a discouraging obstacle. Merely changing your viewpoint regarding potentially frustrating events can significantly change the outcome of your trades.
A proper attitude is one of the best ways to prevent feelings of frustration, but it is also important to build up physiological defenses. Every time you face a setback, it can take a great deal of energy to cope with it. Each setback uses up physical and mental energy, and if you are not careful, a series of setbacks can wear you out. By getting plenty of rest, and especially sound night's sleep, we can cope with frustration more easily. Regular exercise and proper nutrition can help your body create a natural defense against frustration. It is also important to set realistic expectations. You will feel especially frustrated when you set unrealistic expectations and fail to meet them. By realizing that no matter how optimal the market conditions, profits are never guaranteed, you'll feel more at ease when you encounter setbacks. You won't be caught off guard, and you will be ready to deal with them. It may be discouraging at times to continually face setbacks, but it is necessary to learn to deal with them.
On 24th February 2019 we gave our Instant Income Guaranteed subscribers the following trade on CBOE Holdings Inc. (CBOE). Price insurance could be sold as follows:
On 25th February 2019, we sold to open CBOE Apr 18 2019 87.5P @ 0.90, with 53 days until expiration with our short strike about 9% below price action.
On 15th March 2019, we bought to close CBOE Apr 18 2019 87.5P @ 0.45, after 18 days in the trade even if CBOE was mostly going sideways during the life of the trade
Profit: 45$ per option
Margin: 1750$
Return on Margin annualized: 52.14%
Philippe
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♦ SIGN UP TODAY! WEALTH BUILDING FOR YOUR FUTURE ♦
Diversification is one of the crucial factors in the success of some, but not all trading plans, and may in fact make the difference between…read more.
Andy Jordan is the editor for Traders Notebook which shows you Futures Trading Strategies in Spreads, Options, and Swing Trades. Learn step-by-step how to trade successfully.
Ambush starts off with big profits into the year in the Australian Dollar!
The Ambush trading method is specialised in catching intraday market tops and bottoms in a variety of Futures markets. Including the Australian Dollar Future (6A) traded at the CME, where Ambush Traders are having an amazing time so far in 2019.
Ambush day trades on an end-of-day basis so there is no need to even check the markets during the day.
So let’s have a look at what happened in the Australian Dollar so far this year. Early January the market tried to break out to the downside and Ambush got in at a very low price level at around 0.6900, exiting above 0.7000. Since this false breakout as you can see not too much happened. The 6A just kept on moving in tight ranges and has been trading between about 0.71 and 0.73 for two months now.
Good news is that Ambush still was able to capture some nice profits, often getting in at the top/bottom of a day’s range!
Once you realize that this isn’t that uncommon but that it’s exactly what the markets do most of the time don’t you want a strategy that works well under such conditions?
Where is the Australian Dollar going next? For sure to either the top or the bottom of the trading range it’s in. As Ambush Traders we don’t mind, we’ll be there ready to sell to or buy from the novice traders who’ll then accelerate our profits as they got to get out of their next losing trade.
Here’s the result of all of these trades, trading one Australian Dollar Index (6A) contract, including $10 commissions/slippage per trade:
If you’ve been on the other sides of these trades trying to buy the breakouts, you really should consider switching sides!
With Ambush Signals you can easily follow Ambush, a system specialized in catching intraday market tops and bottoms in the Futures markets!
The most popular and easiest way to follow Ambush is Ambush Signals. It does all the work for you, allows you to customise what markets you want to see and has a position sizing tool implemented to automatically adjust the positions to your risk preferences.
Each day around 6:30 pm NY Time the Signals are available for you on the Dashboard. You can then place your orders and literally walk away until the next market close! To find out more about the details of Ambush and how Ambush Signals works, have a look at the Ambush Signals Website.
Let’s be realistic. Following any System can be tough, especially in the beginning. It simply needs time to build the confidence needed to make it through inevitable drawdowns. So what if you are unlucky and don’t catch a good start right away?
I want you to succeed trading Ambush Signals, so here’s something for you that will strongly increase your odds of success and allow you to easily gain the confidence you’ll need to become a long-term profitable Ambush trader.
Did you come up with questions? Don't be shy, email Marco Mayer, he wants to hear from you! This email address is being protected from spambots. You need JavaScript enabled to view it.
To view previous published Chart Scan newsletters, please log in or click on "Join Us,"
shown above, to subscribe to our free "Members Only" section.
A WEALTH OF INFORMATION & EDUCATION:
Joe Ross-Trading Educators' popular free Chart Scan Newsletter has been published since 2004.
Note: Unless otherwise noted, all charts used in Chart Scan commentary were created
by using Genesis Financial Technologies' Trade Navigator (with permission).
Legal Notice and Copyright 2019 Disclaimer - Published by Trading Educators, Inc.
Chart Scan is a complimentary educational newsletter.
The safest and most consistently profitable way to trade has for me been through the development of the Instant Income Guaranteed strategy of trading.
The following is an example of an IIG trade using options.
On 17th May 2017, we gave our Instant Income Guaranteed subscribers a trade for VALE (Vale SA).
We entered a "complex position", entered for a net credit (still working with OPM, i.e. other people's money, as usual), but with unlimited upside potential.
- on 17th May 2017, we entered the trade for an average credit of 2.49 (or 7.47 = 747$ for 3 positions)
- on 7th September 2017, we sold to close one third of our long position
- on 5th January 2018, we bought to close all our short position
- on 2nd October 2018, we sold to close the second third of our long position
- on 10th December 2018, we sold to close the last third of our long position
Profit: 1321.50$
Margin: 330$
Average Short Strike: 16.47$
Return on Margin annualized: 256%
Return on Principle annualized: 51.2%
We stayed 272 days in the trade, and the annualized returns were on the high side. All we had to do was to maximize our profits along the way, by being patient, closing the last long position for a reduced profit (trade war, end of year weakness).
This was a low maintenance, low stress trade with lots of upside potential.
When you're under a great deal of pressure, it is easy to make mistakes. You feel the stress, and when you're on edge, it is difficult to make decisions or to look at your current trading predicament objectively. It's much nicer to feel you are ahead of the game, than struggling hard to come back from behind. When you have a drawdown, you can feel a little disappointed, a little stunned, as if you have fallen, and you are having trouble getting up. After you've made a series of successful trades, however, you can feel much more powerful, as if you can relax a little bit. And when you feel relaxed, you also feel creative, and can think of winning strategies. Everything seems to click and you start trading effortlessly and profitably. Feeling ahead of the game usually puts you in an optimal mental state. But it is hard to feel such empowerment when you are feeling behind, or stuck in a rut, not making any headway. At these times, it is important to remember that there are two types of momentum—profit momentum, and mental momentum.
We're all familiar with profit momentum. That's when you are way ahead in terms of profits. Mental momentum is also useful, though. We feel mental momentum when we believe we have made our best effort, when we feel that we have done everything we possibly could have done. At these times, it is useful to pat ourselves on the back for a job well done. While trading, we usually forget to give ourselves credit when we have put in a good effort. We are usually focused only on profits and those efforts that produce profits. In order words, we focus exclusively on performance goals, while completely forgetting about learning goals, which are equally important.
Instead of only focusing on a performance goal, such as striving for a 20% profit per month, for example, it is useful to think of other goals that are equally important: Goals that take effort, but may not always directly produce a profit. There are many modest goals that can be achieved more easily and deserve a reward upon completion. It is useful to break down the goal of making a huge profit from a few good trades into specific steps that are doable, and should be rewarded after each step. For example, studying for 30 hours a week or learning a new trading technique is important and worthy of reward, even if the reward is just a personal sense of accomplishment. The specific goal may not immediately lead to the larger goal of making a 20% profit per month, but it is easy to achieve, will lead to personal satisfaction upon completion, and in the long run, will contribute to the long term goal of becoming a seasoned, profitable trader. The more you complete these modest goals, the more mental momentum you will generate.
It is important to give yourself credit for all the effort you put into trading. It is tempting to feel good about your efforts only when they pay off, but you put in just as much effort putting on a losing trade as a winning trade. Regardless of whether you win or lose, you'll feel better if you reward yourself for all the work you do, regardless of the outcome. The more you reward yourself for all the work you do, the more mental momentum you will feel. This, in turn, will make you feel strong and empowered, allowing you to trade more effortlessly and profitably.
On 3rd March 2019 we gave our Instant Income Guaranteed subscribers the following trade on CF Industries Holdings Inc. (CF). Price insurance could be sold as follows:
On 4th March 2019, we sold to open CF Apr 12 2019 36.5P @ 0.35, with 38 days until expiration with our short strike about 14% below price action.
On 13th March 2019, we bought to close CF Apr 12 2019 36.5P @ 0.15, after 9 days in the trade for quick premium compounding
Profit: 20$ per option
Margin: 730$
Return on Margin annualized: 111.11%
Philippe
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♦ SIGN UP TODAY! WEALTH BUILDING FOR YOUR FUTURE ♦
A few years ago I had an interesting conversation with Joe about “what makes a trader a successful trader”. We discussed this over several days because we…read more.
Andy Jordan is the editor for Traders Notebook which shows you Futures Trading Strategies in Spreads, Options, and Swing Trades. Learn step-by-step how to trade successfully.
Ambush starts off with big profits into the year in the Australian Dollar!
The Ambush trading method is specialised in catching intraday market tops and bottoms in a variety of Futures markets. Including the Australian Dollar Future (6A) traded at the CME, where Ambush Traders are having an amazing time so far in 2019.
Ambush day trades on an end-of-day basis so there is no need to even check the markets during the day.
So let’s have a look at what happened in the Australian Dollar so far this year. Early January the market tried to break out to the downside and Ambush got in at a very low price level at around 0.6900, exiting above 0.7000. Since this false breakout as you can see not too much happened. The 6A just kept on moving in tight ranges and has been trading between about 0.71 and 0.73 for two months now.
Good news is that Ambush still was able to capture some nice profits, often getting in at the top/bottom of a day’s range!
Once you realize that this isn’t that uncommon but that it’s exactly what the markets do most of the time don’t you want a strategy that works well under such conditions?
Where is the Australian Dollar going next? For sure to either the top or the bottom of the trading range it’s in. As Ambush Traders we don’t mind, we’ll be there ready to sell to or buy from the novice traders who’ll then accelerate our profits as they got to get out of their next losing trade.
Here’s the result of all of these trades, trading one Australian Dollar Index (6A) contract, including $10 commissions/slippage per trade:
If you’ve been on the other sides of these trades trying to buy the breakouts, you really should consider switching sides!
With Ambush Signals you can easily follow Ambush, a system specialized in catching intraday market tops and bottoms in the Futures markets!
The most popular and easiest way to follow Ambush is Ambush Signals. It does all the work for you, allows you to customise what markets you want to see and has a position sizing tool implemented to automatically adjust the positions to your risk preferences.
Each day around 6:30 pm NY Time the Signals are available for you on the Dashboard. You can then place your orders and literally walk away until the next market close! To find out more about the details of Ambush and how Ambush Signals works, have a look at the Ambush Signals Website.
Let’s be realistic. Following any System can be tough, especially in the beginning. It simply needs time to build the confidence needed to make it through inevitable drawdowns. So what if you are unlucky and don’t catch a good start right away?
I want you to succeed trading Ambush Signals, so here’s something for you that will strongly increase your odds of success and allow you to easily gain the confidence you’ll need to become a long-term profitable Ambush trader.
Did you come up with questions? Don't be shy, email Marco Mayer, he wants to hear from you! This email address is being protected from spambots. You need JavaScript enabled to view it.
To view previous published Chart Scan newsletters, please log in or click on "Join Us,"
shown above, to subscribe to our free "Members Only" section.
A WEALTH OF INFORMATION & EDUCATION:
Joe Ross-Trading Educators' popular free Chart Scan Newsletter has been published since 2004.
Note: Unless otherwise noted, all charts used in Chart Scan commentary were created
by using Genesis Financial Technologies' Trade Navigator (with permission).
Legal Notice and Copyright 2019 Disclaimer - Published by Trading Educators, Inc.
Chart Scan is a complimentary educational newsletter.
It has often been said that trading is not rocket science. I believe that. You don't need to be as brilliant as a rocket scientist to trade the markets profitably. I know I’m not that bright. That said, there are moments when a trader has a brilliant insight and takes home huge profits because of it. (I don't know any rocket scientists, but I'll bet that a rocket scientist isn't brilliant every waking moment, and occasionally, must also rely on a moment of brilliance to get the job done.) All traders have their moments when they have a brilliant insight and profit from it.
When I talk to winning traders, I enjoy asking them to describe their biggest winning trades. Usually a combination of luck and brilliant insight results in the biggest wins. For example, in an often told story, a trader just happened to own stock in a company that was talked up by a media analyst. The price jumped on the news, and the trader sold into strength for a huge gain. In other stories, traders make a good guess that a product or service is bound to be in high demand in the future and that eventually the stock price is going to reflect the demand. For example, if you perceived early that all the kids on the block were going to successfully convince their parents to buy them an iPod, you would have made a killing buying Apple stock a few years ago. Other traders capitalize on unexpected world events, like droughts, floods, earthquakes, or hurricanes.
So what's the lesson? Sometimes you will have a brilliant insight and make a killing, but other times, you will not. Should you wait around for a brilliant insight and stand aside at other times? No. If you take no action, you will stagnate, and then, when a "once-in-a-lifetime" trade happens, you won't have the skills to execute the trade and capitalize on the opportunity. Instead, you should trade day after day, and always accept what the markets have to offer. Don't demand that the markets give you rare trading opportunities every day. There will be times when you will come across a rare market event, but the rest of the time, you have to settle for finding profitable run-of-the-mill trades. It is vital that you scour the markets for high probability setups and trade them, rather than only look for potentially big wins. The typical offerings may not allow you to achieve 50% of your earnings on a single trade, but they will allow you to make profits across a series of trades.
As much as you want to find that big trade that you can talk about for the rest of your life, realize that it may not be the big, thrilling trades that matter, but the smaller trades you make every day to become a winning trader.
On 11th February 2019 we gave our Instant Income Guaranteed subscribers the following trade on FireEye Inc. (FEYE). Price insurance could be sold as follows:
On 11th February 2019, we sold to open FEYE Mar 29 2019 13.5P @ 0.11, with 48 days until expiration with our short strike about 17% below price action.
On 1st March 2019, we bought to close FEYE Mar 29 2019 13.5P @ 0.04, after 18 days in the trade.
With only 270$ margin requirement, this trade was suitable for very small accounts.
Profit: 7$ per option
Margin: 270$
Return on Margin annualized: 52.57%
Philippe
Receive daily trade recommendations - we do the research for you.
♦ SIGN UP TODAY! WEALTH BUILDING FOR YOUR FUTURE ♦
You will never be a perfect trader. However, as traders we have a strong need to want complete control over the outcome of a trade. We want to…read more.
Andy Jordan is the editor for Traders Notebook which shows you Futures Trading Strategies in Spreads, Options, and Swing Trades. Learn step-by-step how to trade successfully.
Ambush starts off with big profits into the year in the Australian Dollar!
The Ambush trading method is specialised in catching intraday market tops and bottoms in a variety of Futures markets. Including the Australian Dollar Future (6A) traded at the CME, where Ambush Traders are having an amazing time so far in 2019.
Ambush day trades on an end-of-day basis so there is no need to even check the markets during the day.
So let’s have a look at what happened in the Australian Dollar so far this year. Early January the market tried to break out to the downside and Ambush got in at a very low price level at around 0.6900, exiting above 0.7000. Since this false breakout as you can see not too much happened. The 6A just kept on moving in tight ranges and has been trading between about 0.71 and 0.73 for two months now.
Good news is that Ambush still was able to capture some nice profits, often getting in at the top/bottom of a day’s range!
Once you realize that this isn’t that uncommon but that it’s exactly what the markets do most of the time don’t you want a strategy that works well under such conditions?
Where is the Australian Dollar going next? For sure to either the top or the bottom of the trading range it’s in. As Ambush Traders we don’t mind, we’ll be there ready to sell to or buy from the novice traders who’ll then accelerate our profits as they got to get out of their next losing trade.
Here’s the result of all of these trades, trading one Australian Dollar Index (6A) contract, including $10 commissions/slippage per trade:
If you’ve been on the other sides of these trades trying to buy the breakouts, you really should consider switching sides!
With Ambush Signals you can easily follow Ambush, a system specialized in catching intraday market tops and bottoms in the Futures markets!
The most popular and easiest way to follow Ambush is Ambush Signals. It does all the work for you, allows you to customise what markets you want to see and has a position sizing tool implemented to automatically adjust the positions to your risk preferences.
Each day around 6:30 pm NY Time the Signals are available for you on the Dashboard. You can then place your orders and literally walk away until the next market close! To find out more about the details of Ambush and how Ambush Signals works, have a look at the Ambush Signals Website.
Let’s be realistic. Following any System can be tough, especially in the beginning. It simply needs time to build the confidence needed to make it through inevitable drawdowns. So what if you are unlucky and don’t catch a good start right away?
I want you to succeed trading Ambush Signals, so here’s something for you that will strongly increase your odds of success and allow you to easily gain the confidence you’ll need to become a long-term profitable Ambush trader.
Did you come up with questions? Don't be shy, email Marco Mayer, he wants to hear from you! This email address is being protected from spambots. You need JavaScript enabled to view it.
To view previous published Chart Scan newsletters, please log in or click on "Join Us,"
shown above, to subscribe to our free "Members Only" section.
A WEALTH OF INFORMATION & EDUCATION:
Joe Ross-Trading Educators' popular free Chart Scan Newsletter has been published since 2004.
Note: Unless otherwise noted, all charts used in Chart Scan commentary were created
by using Genesis Financial Technologies' Trade Navigator (with permission).
Legal Notice and Copyright 2019 Disclaimer - Published by Trading Educators, Inc.
Chart Scan is a complimentary educational newsletter.
Chart Scan with Commentary: Classical Chart Projection
Hey Joe! I’ve asked everyone I know, but no one seems to know, “what is a ‘hedge wrapper.’”
A hedge wrapper is also known as a “Collar.” Based on the rest of what you wrote about complete protection against a drop in price, what you probably want is called a “Zero Cost Collar.”
A zero cost collar is a form of options collar strategy where the outlay of money on one half of the strategy offsets the cost incurred by the other half. It is a protective options strategy that is implemented after a long position in a stock that has experienced substantial gains. You buy a protective put and sell a covered call. Other names for this strategy include zero cost options, equity risk reversals, and hedge wrappers.
For example, if the underlying stock trades at $120 per share, the investor can buy a put option with a $115 strike price at $0.95 and sell a call with a $124 strike price for $0.95. In terms of dollars, the put will cost $0.95 x 100 shares per contract = $95.00. The call will create a credit of $0.95 x 100 shares per contract - the same $95.00. Therefore, the net cost of this trade is zero.
It is not always possible to execute this strategy as the premiums, or prices, of the puts and calls do not always match exactly. Therefore, investors can decide how close to a net cost of zero they want to get. Choosing puts and calls that are out of the money by different amounts can result in a net credit or net debit to the account. The further out of the money the option, the lower its premium. Therefore, to create a collar with only a minimal cost, the investor can choose a call option that is farther out of the money than the respective put option is. In the above example, that could be a strike price of $125.
To create a collar with a small credit to the account, investors do the opposite—choose a put option that is farther out of the money than the respective call. In the example, that could be a strike price of $114.
At the expiration of the options, the maximum loss would be the value of the stock at the lower strike price, even if the underlying stock price fell sharply. The maximum gain would be the value of the stock at the higher strike, even if the underlying stock moved up sharply. If the stock closed within the strike prices then there would be no effect on its value.
If the collar did result in a net cost, or debit, then the profit would be reduced by that outlay. If the collar resulted in a net credit then that amount is added to the total profit.
It is Tuesday, and you’ve been watching the markets closely for the past two weeks. It appears to be the fulfillment of your dreams: prices are making new market highs. You wonder, "What is the smart thing to do?" On the one hand, you can go long, but will this optimism last? Oil prices are still high, but they are lower and a little more stable compared to last summer. Everyone is hoping that companies will show strong earnings this quarter, but will they? Are the record highs just temporary? On Wednesday, the masses were worried about interest rates and the markets across the board closed down. Perhaps, cautious optimism may be warranted. Many traders and investors prefer a bullish market, but smart traders are cautiously optimistic these days. When trading the markets, you can't count on a sure thing. It can be up for several days and down the next. No one knows with 100% certainty what will happen next.
There is no replacement for doing your homework. The more you know about the markets and the companies you trade, the greater your odds of winning. Which companies will have earnings that match analysts' forecasts, and more important, will it matter? As any astute market observer knows, a stock may rise before an earnings announcement, if the masses are optimistic, but should the earnings report fail to match expectations, the price will decline even though the company may have done rather well. It's all a matter of the opinion of the buyers and sellers.
What will the masses do? That's the big question. Right now, there is international turmoil and a belief that we may not experience the economic growth to which we have been accustomed. And when that happens, the masses may turn to pessimism. What can you do to profit?
To a great extent, it depends on your personality. If you are a risk taker, you can capitalize on the times. You can trade on the likely probability that the masses will sell markets that fail to meet analyst expectations, feel seller's regret, and buy back what they sold out of impulsive fear. You can buy at the low point and sell it back to them when seller's regret sets in. One warning, however, it sounds easier than it is. But as a strategy, it works. Whether you try it depends on your personal psychology. If you don't mind the risk and uncertainty, it will work for you. If you are a cautious, however, then this may be a time to stand aside. Cautious stock and option traders stay away from trading right before earnings reports. You never know what will happen until it happens. The cautious trader may not want to risk money when analyst forecasts and earnings reports have the most power to dictate how the masses will behave. The masses react to news, reports, and speeches, and unless you have a crystal ball, you cannot know how the market will react. They can rise or fall on good news, and vice-versa on bad news.
In the end, even during times of optimism, it is wise to stick to the basics. Manage risk by risking only a small amount of capital on a single trade. Think in terms of the big picture and realize that what matters most is your performance across a series of trades. And work hard. Study the markets. Make an educated guess as to what the masses will do, and outline detailed trading plans. And most important, trade your plan. Sticking to the basics may not allow you to make huge profits on a few key winning positions, but on the other hand, it will keep you in the game should the markets turn against you. And in all likelihood, when you stick to the basics, you will end up taking home huge profits overall.
On 11th February 2019 we gave our Instant Income Guaranteed subscribers the following trade on Lumentum Holdings Inc. (LITE). Price insurance could be sold as follows:
On 12th February 2019, we sold to open LITE Mar 22 2019 35P @ 0.35, with 40 days until expiration with our short strike about 21% below price action.
On 20th February 2019, we bought to close LITE Mar 22 2019 35P @ 0.15, after 8 days for quick premium compounding.
Profit: 20$ per option
Margin: 700$
Return on Margin annualized: 130.36%
Philippe
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Trading Article: Why we use a 15-year seasonal pattern for trading spreads
Much seasonally based information conforms to random probability generated data. Avoid trading seasonally…read more.
Andy Jordan is the editor for Traders Notebook which shows you Futures Trading Strategies in Spreads, Options, and Swing Trades. Learn step-by-step how to trade successfully.
Ambush starts off with big profits into the year in the Australian Dollar!
The Ambush trading method is specialised in catching intraday market tops and bottoms in a variety of Futures markets. Including the Australian Dollar Future (6A) traded at the CME, where Ambush Traders are having an amazing time so far in 2019.
Ambush day trades on an end-of-day basis so there is no need to even check the markets during the day.
So let’s have a look at what happened in the Australian Dollar so far this year. Early January the market tried to break out to the downside and Ambush got in at a very low price level at around 0.6900, exiting above 0.7000. Since this false breakout as you can see not too much happened. The 6A just kept on moving in tight ranges and has been trading between about 0.71 and 0.73 for two months now.
Good news is that Ambush still was able to capture some nice profits, often getting in at the top/bottom of a day’s range!
Once you realize that this isn’t that uncommon but that it’s exactly what the markets do most of the time don’t you want a strategy that works well under such conditions?
Where is the Australian Dollar going next? For sure to either the top or the bottom of the trading range it’s in. As Ambush Traders we don’t mind, we’ll be there ready to sell to or buy from the novice traders who’ll then accelerate our profits as they got to get out of their next losing trade.
Here’s the result of all of these trades, trading one Australian Dollar Index (6A) contract, including $10 commissions/slippage per trade:
If you’ve been on the other sides of these trades trying to buy the breakouts, you really should consider switching sides!
With Ambush Signals you can easily follow Ambush, a system specialized in catching intraday market tops and bottoms in the Futures markets!
The most popular and easiest way to follow Ambush is Ambush Signals. It does all the work for you, allows you to customise what markets you want to see and has a position sizing tool implemented to automatically adjust the positions to your risk preferences.
Each day around 6:30 pm NY Time the Signals are available for you on the Dashboard. You can then place your orders and literally walk away until the next market close! To find out more about the details of Ambush and how Ambush Signals works, have a look at the Ambush Signals Website.
Let’s be realistic. Following any System can be tough, especially in the beginning. It simply needs time to build the confidence needed to make it through inevitable drawdowns. So what if you are unlucky and don’t catch a good start right away?
I want you to succeed trading Ambush Signals, so here’s something for you that will strongly increase your odds of success and allow you to easily gain the confidence you’ll need to become a long-term profitable Ambush trader.
Did you come up with questions? Don't be shy, email Marco Mayer, he wants to hear from you! This email address is being protected from spambots. You need JavaScript enabled to view it.
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