The Double Slit Experiment

I’m so freaking bored with the market right now… it’s been so frustrating.  That said, we did have premium come in this week nicely on most of our positions, and the bond selloff Friday was a welcome change.  But that didn’t keep me from...

ThinkorSwim Coding Part 3 – Backtesting

We have a proprietary option backtest model that we use for research here, but I want to introduce the basic code for backtesting in TOS.  The reason for this is actually to help folks do their own research and realize how random the markets are. First, a caveat:...

Trade Probabilities and Statistics

“There’s lies, damn lies, and then there are statistics…” – My Dad (quoting “unknown”). Virtually everything we preach here is all about probabilities.  We teach to be mechanical, no emotion, no opinions, as best we can.  The...

Brexit: Putting time on your side

On June 21st, I was chatting with Adam in the evening.  The “Brexit” vote was coming up and I viewed it as an opportunity.  At the time, I figured it would be a non-event… just like everyone.  So I sold an /ES straddle. It’s basically the most...

Beginner’s Guide to Volatility

If you’re joining us new (and I hope you are), you’ll hear us talk almost exclusively about volatility.  But what does that really mean? Strictly speaking, volatility is the standard deviation of returns over a given period.  For example, take the day over...

Walmart’s Roll Back Pricing

I view what we do as a business.  Moreover, I view what we do as nothing different than what every successful retailer in history has done: selling goods for more than they are worth, and making money on the difference.  That’s all we really do. So let’s...

Contrary Contrarian

Does it benefit to sell into strength?  That question actually got me up early this morning.  While I’ve looked at it before and concluded that, essentially, the math works out the same regardless of the directional bias – selling when a stock is...

Does Delta Matter?

Ever since I started selling premium, I’ve advanced the idea of “short premium, short delta.”  The idea is that when you’re short premium, as markets go down, and volatility increases, your short delta should help offset the increase in premium...

Limiting the Upside

Alright, I spent most of the day on this study. This is the follow up from my conversation with a “traditional” broker that I talked about yesterday. To recap, I suggested selling calls against any long position as a way to reduce cost basis and returns...

A View from the Other Side…

We need to keep an open mind.  I think too often we get to myopic in our own beliefs simply because we ignore the other side.  I also tend to think that’s a toxic way of living life. Which is why I engaged my wife’s cousin, who is a broker for one of the...