Tuesday, February 25, 2014

Staggering expirations

One strategy that people usually find very attractive is the selling of naked put options. The strategy consists in selling a put option at level that you consider a good point of entry and until that price is reached you get the payment to wait. 

This seems good, especially when you are speaking about good stocks. The main problem is that for you to achieve a good premium on the sold option, you have to get close to the actual trading price, which usually isn’t the strike you are planning to buy when you evaluate the trade.

One of the solutions for this strategy is to staggering the options. So if you sell an option far away in time, you might get the premium you were willing to get, as well as the perfect strike price. 

What happens now is that you are too far in time. In order to solve this issue, you can sell a 3 month option today, a new 3 month in the next month and a new 3 month after that. 

After a while, you will have your options expiring monthly, as if you were selling the front month. The first three months will be boring, but after that you get a cash cow. 

Selling a put option has the same chart of a covered call. 

Note: Options are risky and you should read Characteristics and Risks of Standardized Options and Supplements.

Monday, February 24, 2014

Keep it simple... always!

This is a nice chart showing the characteristics needed for a turnaround story.
Most of the times people tend to focus on a lot of ratios and complicated projections.

My advice... Keep it very simple.

Ur Energy on the weekly frame... by steveoliveira on TradingView.com

Wednesday, February 19, 2014

The Loop...

Have you ever noticed when you start studying some technique that almost immediately you get the feeling that everyone is doing that? It starts with a search engine, then forums, then a lot of other things, and you get that sensation that you are jumping to the new trend in investing. With the market being in the end highly counter intuitive, this will put a big hurdle right in the beginning as you will have to deal with your own insecurity and only after you can get through the market.

Let's consider an example: You finish reading a book with a very interesting theme like covered calls. The subject is fascinating and makes a lot of sense. You dig further, and find many sites that are full of members devoted to this trading strategy. You begin to look for potential failures and testimonials for someone who got it wrong. After a while, you are inside a world that makes you think that nothing else makes sense. You just found the closest thing to a holly grail.

Then comes disappointment, all the dreams you had seemed to vanish slowly and like a drug addict you will go through all the phases: disillusion, disappointment, frustration and in the end you give up.

Can you avoid all of this? maybe not...

Sunday, September 15, 2013

Spring/Upthrust System


The original set o rules came from a book by John R. Hill.
They were reoffered by another vendor and sell for $100.

Long entry rules

Pivot Point Low: Lowest point in a movement prior to penetration of a daily high. Close must be above previous close on day of penetration of that high.
After pivot point, wait for penetration of that low. Go long on the close of day that:
1. Closes above two previous closes.
2. Close is above the pivot point low.
3. Close is above opening price and above the midrange of the day action.
4. This day range is greater than the previous day's range.
5. This reversal day occurs no later than six days after penetration of pivot point low.

Short Entry Rules

Exact opposite of the above. In other words, look for penetration of pivot point high and then reversal down.

Initial Stop on Long:
One tick below the extreme low after entry.

Initial Stop on Short:
One tick above extreme high after entry.

Trailing Stop:
Always move stop up to next pivot point low.

Exit Rules on Buys:(Exit Rules for Shorts are Opposite)
1. Only on execution of stop or on a sell signal.
2. After a $1000 profit or rule 1.
3. Four days after entry or rule 1.
4. Move stop to a point of entry if position is at a profit after four days and then exit via rule 1.

Tuesday, September 10, 2013

How to diversificate properly your portfolio?

Just follow this set of rules:

1. You cannot purchase a stock that will increase a position more than 25% of your portfolio (always).
2. No one stock can exceed 25% of your portfolio assets (Majority of quarter).
3. Half of your portfolio must be made up of stocks of 10%(or less) of your portfolio assets (Majority of quarter).

And that's it!

Monday, September 09, 2013

Next cycle up?

Next cycle up? by steveoliveira on TradingView.com

Complex normally is followed by a contrarian movement.

What everyone looks for in the stock market?

Everyone have dreams, and the majority has a crappy job or a lot of debt and Mr. Market is there and offers you the light at the end of the tunnel. Most people can achieve a good return on investment if pointed on the right direction, however if a good return is something around 10 to 15% a year, then we have a problem.

How can I solve my problems with a 15% per year on 10.000 USD of investment? 1500 USD?

So the solution is to try to keep looking for some kind of strategy that yields you something big. Because you know that is possible to achieve such a return. You saw Tim Sykes, and the guy can do it, and teaches you how to get there, so can you replicate him? I don't know that answer, I just know that for the majority of you are going to loose time and money in the process.

The idea that you can yield a big return from a little account that can change your life and put you trading for a living from any part of the world seems compelling.

My advice…

Take a look at Millionaire Traders from Kathy Lien. It’s an interesting book… See if you identify yourself with any of the traders and good luck with the process.

Thursday, September 05, 2013


Now harmonics are the new trend in technical analysis. I haven´t seen this subject in my CMT exams, but i guess it will be there soon.
The big question is to know if it works, and the answer is yes and no.

We have a tendency to memorize the charts that worked and seem to forget the ones that didn't, in the end it's all a matter of money management for the people who put the trades.
There will be the whipsaws or the noise to make your life harder, it's a part of the process as in all other patterns.
In the meantime, let's enjoy.



Some upside here... by steveoliveira on TradingView.com