BookingAlpha - Option Trading Signals For Consistent Monthly Trading Profits

Watching Paint Dry, Happy Memorial Day!

admin@bookingalpha.com (Trevor) — Thu, 24 May 2012 20:17:57 +0000

It was a pretty quiet trading day today and should be even quieter tomorrow. There were no headlines out of Eurloand overnight and flash PMI's all missed expectations. Notably, the first ever US flash PMI printed at 54 this morning. Jobless claims were also a non-event today. All in all, it was a "watching paint dry" type of day trading-wise.

We went sniffing around to layer on some more trades today but weren't able to dig up anything very attractive. We don't expect to do any trading tomorrow either. Monday is a Holiday and we will be looking to open new spreads potentially next week.

Our 2 Weekly Trading Service positions (IWM and SPX Iron Condors) are set up beautifully going into to weekly opex tomorrow. Even if a big move does indeed occur, which we don't anticipate before the long weekend, the positions have great margins of safety to the upside and downside. We expect full profits on both trades of approximately +18% and +8%, respectively

Our 2 Monthly Trade Services trades (SPY & IWM Iron Condors) were opened this week for nice credits and are also in a good position considering the current underlyings prices. Some are calling for a trading range over the summer while others expect further deep pullbacks. The put legs of both Iron Condors are very far OTM to insure against further declines in the markets while the calls are near the recent tops printed in April.

If a trading range does materialize, these positions will reap profits quickly as juicy credits were received to open the trades and volatility will collapse in that scenario. If volatility picks up, each of the legs of each trade (call legs & put legs) will hedge the other and the juicy credits received will provide a lot of room to work with if adjustments are required.

Thanks to everyone and have a great day and Holiday! THANK YOU to all our Armed Services men and women, both Active and Veterans! Your sacrifices are not unappreciated or forgotten.

Volatility Continues While Markets Seek Direction, New Trades In Both Trading Services

admin@bookingalpha.com (Trevor) — Tue, 22 May 2012 20:37:46 +0000

Today was a wild day after yeasterday's strong rally. Markets were up quite nicely early, then pulled back, then rallied again. However, as the closing bell approached, the Bears made their presence known by pushing all 4 major indexes into the red. Ultimately, markets closed flat on the day with the Nasdaq and Russell posting -0.3% and -0.60% losses, respectively.

The lack of follow through of yesterday's rally is not very encouraging for the bulls. The dead cat bounce may already be over. Many were targeting S&P 1330 for this bounce and today we touched S&P 1328. Headlines will be quiet the remainder of the week with only jobless claims and flash PMI releasing on Thursday. As a result, we could see some sideways action as market digests the recent volatility.

We took advantage of the continued volatility today opening new Iron Condors in both Trading Services. Both Services now have 2 Iron Condors open: IWM and SPX in the Weekly Service and IWM and SPY in the Monthly Service. We anticipate opening an additional Iron Condor for the Monthly Trading Service before the end of the week.

This week's Condors have generated large premiums compared to other trades over the last few months and have been opened earlier in the expiration cycle, with respect to the Monthly Trading Service. This is by design as the larger credits and longer time window allows us to navigate the volatility and potentially close the trades before expiration as the individual legs (call leg and put leg) decay in value.

Thanks to everyone and have a great day!

05/20/2012 Market Recap: Market Pullback Continues

admin@bookingalpha.com (Trevor) — Sun, 20 May 2012 15:56:40 +0000

Broader Market Weekly Performance:

Dow -3.50%

S&P -4.30%

Nasdaq -5.25%

Russell -5.42%

www.BookingAlpha.com

Check out my latest interview on Benzinga and TraderInterviews.com

MARKET UPDATE:

Markets were slammed this week with pullbacks of-3.5% to 5.4% across the 4 major indices. JPM loss estimates continued to grow reaching total expected losses of $3-5B for the bank. Credit spreads blew out in Euroland and Greece continues to be a disaster.

BTW, Facebook went public in case you have been sleeping for the last month. However, the market could have really cared less about the $104B IPO. We wont bore you with continued re-hash of the week's headlines and events; we are confident you are sick of hearing it all.

From a market point of view, the S&P sliced though 1320 to close below the 1300 level at 1295. The markets are deeply oversold here and some of our network of trader-friends actually went home long into the weekend anticipating a relief bounce this coming week.

We agree a relief bounce is in the cards. However, we also believe S&P 1250-1260 is in the cards as well; the question is whether the lower S&P level will be reached before the bounce or after. It remains to be seen at this juncture. If markets can find support here it would be encouraging. However, a visit to UNCH on the year (S&P 1258) is expected before all of this volatility is over.

Navigate wisely and stay profitable, my friends. Happy trading!

BOOKINGALPHA UPDATE:

Monthly Trading Service Commentary:

This week we got nabbed by the market's meltdown. Our positions looked fine going into the end of the week despite the multi-day pullback. However, the market continued to decline slicing through important support levels causing us to close the SPX, QQQ, and RUT Bull Put Credit Spreads for losses.

The last minute timing of Thursday's close orders for RUT & QQQ was not preferred but necessary considering the meltdown of the market in the final hour of trading. Some orders were not entered in time and were left to the settlement / expiration process.

Rolling any of the spread positions would not have provided enough downside protection to keep us far enough OTM considering the spike in volatility. This, closing the positions was the most prudent action.

Ultimately, adhering to proper risk management and closing the spreads was the right move as holding the SPX and QQQ would have resulted in disastrous losses. The SPX would have been a total loss if it was held and the QQQ would have been around 60%. Our losses were much smaller than that as we closed the trades before our 35% stop loss threshold was hit in an effort to conserve capital. It was the proper move from a risk management perspective.

The RUT settlement was $753.60, resulting in a $1.40 debit to those holding the RUT spread through Thursday's close. Our closing orders executed around a $3.10 average. Losses for the trade were between 10-29%, depending on execution price or settlement price.

The loss occurred at a bad time (not that any losses are ever at a good time) because we the Monthly Portfolio had reversed losses from early in the year at a quick pace and was heading a very good direction. However, we adhered to proper risk management and closed the trades before our stop loss threshold was hit. Again, it was the proper move from a risk management perspective.

While losses are unfortunate, they are a part of trading. Looking at past trading years you will see drawdowns like this do occur and ultimately, how we prevailed. This is not a justification, merely a reminder that this situation is still within the realm of normal portfolio gyration. While it may be uncomfortable and is surely no fun, my position sizing allows for these drawdowns providing enough capital to recover. See past year's results and let them speak for themselves. For more information please read: Generating Alpha Comes With Volatility

Monthly Trading Service YTD vs S&P 500:

-16.43% YTD BookingAlpha Monthly Advisory

vs.

+2.88% YTD S&P 500

See Trading Record

Weekly Trading Service Commentary:

This week we got nabbed by the market's meltdown. Our position looked fine going into the end of the week despite the multi-day pullback. However, the market continued to decline slicing through important support levels causing us to close the RUT Bull Put Credit Spread for a loss at the end of Thursday's trading.

The last minute timing of the close order was not preferred but necessary considering the meltdown of the market in the final hour of trading. Some orders were not entered in time and were left to the settlement / expiration process.

Rolling the RUT spread would not have provided enough downside protection to keep us far enough OTM considering the spike in volatility. This, closing the position was the most prudent action.

Ultimately, the RUT settlement was $753.60, resulting in a $1.40 debit to those holding the RUT spread through Thursday's close. Our closing orders executed around a $2.00 average. Losses for the trade were between 20-33%, depending on execution price or settlement price.

The loss occurred at a bad time (not that any losses are ever at a good time) because we the Weekly Portfolio had reversed losses from early in the year at a quick pace and was heading a very good direction. However, we adhered to proper risk management and closed the trade before our 35% stop loss threshold was hit in an effort to conserve capital. It was the proper move from a risk management perspective.

Weekly Trading Service YTD vs S&P 500:

-18.67% YTD BookingAlpha Weekly Advisory Portfolio

vs.

+2.88% YTD S&P 500

See Trading Record

Check out the BookingAlpha Trading Record

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A Weak Rally Rolls Over....Again

admin@bookingalpha.com (Trevor) — Wed, 16 May 2012 20:59:39 +0000

Another trading day, another day down for the markets. The bounce this morning was very thin which ultimately rolled over as expected. There was a 2 minute rally as the Fed released its statement but there was nothing new and markets quickly turned back to selling. Markets closed down, again, posting -0.25% to -0.50% losses across the 4 major indexes.

We took advantage of the weak rally this morning to unload an SPX Bull Put Credit Spread that was getting a little too close for comfort due to the selling lately. We bailed on the position as an adjustment would have had to taken place by rolling to June options but would not have given us enough safety to the downside to roll out an additional 30 days. We opportunistically closed the positions to result in a small -$1.10 loss equating to -11.7% for the position.

Keeping losses small is crucial to effective trading. Closing this trade was definitely the right decision as by the end of the day the S&P rolled over, as anticipated, and the spread we closed was trading for a much higher amount. We saved ourselves from losing much, much more by the end of the day; the loss could have been as high as -30% (or more) if we had not pulled the trigger. The S&P may turnaround and rally tomorrow (the last day the SPX index options trade before settling at Friday's open) but adhering to risk management is a better plan than gambling (aka: hoping) for a rally. The S&P closed the day within 5 points of our short spread. The average daily trading range for the S&P is almost 16 points. Bailing for a marginal and manageable loss while adhering to risk management is always the right move.

We "went fishing" for a new SPX spread in the afternoon to replace the morning's closed spread but no triggers occurred. We are not willing to chase trades in this environment and the trade was canceled after the close due to lack of executions. Oh well, we'll move on to the next one.

Now on to better news: Our remaining RUT & QQQ spreads are in good shape heading into expiration. The RUT has one more trading day (tomorrow) and lies almost 20 points above our short spreads providing ample room for further declines before our spreads are in trouble. The QQQ has 2 full trading days before expiration and also lies comfortably above our short strikes. Most importantly, the values of the both spreads are approximately equal to what we collected for selling them. Therefore, we are not reflecting any losses on the trades as the volatility's and probabilities of the spreads point to a successful expiration. Thus, we are comfortable holding them as is for now. For contrast, this was/is not the case for the S&P spread which is why we closed it today.

We will continue to manage the our positions conservatively through May Expiration and into June as the selling is not over. However, a short term tradeable bounce is probably in the cards next week.

Thanks to everyone and have a great day!

05/13/2012 Market Recap: Markets Fall, S&P Holds 1350

admin@bookingalpha.com (Trevor) — Sun, 13 May 2012 16:21:17 +0000

Broader Market Weekly Performance:

Dow -1.67%

S&P -1.15%

Nasdaq -0.83%

Russell -0.22%

www.BookingAlpha.com

Check out my latest interview on Benzinga and TraderInterviews.com

MARKET UPDATE:

Markets weakened again this week as more worries from Euroland, softening domestic economic data, and disclosure by JPM of a $2.3B los; net loss after realizing gains of approximately $1B.

Friday's trading was somewhat encouraging as prior to JPM's announcement, we were anticipating a relief bounce. Thanks to JPM, the bounce did not materialize. However, another rout did not happen either. That is a sign of strength for markets as all week, after strong down openings, markets clawed back to reverse much of the losses. Buyer stepped in all week to buy the weakness.

Now, let's not get too overly bullish here. However, I don't think we should get overly bearish. The market is at a crucial stage where it could either break higher or lower or simply stay flat and digest the recent move. Our analysis indicates that even a break lower should be fairly contained to the downside.

The recent explosion of volatility has made far OTM put spreads in June and July very attractive. As long as S&P 1338 - 1350 holds, things are decent shape. The 200 Day MA lies around 1280 which should abate any further declines.

Navigate wisely and stay profitable, my friends. Happy trading!

BOOKINGALPHA UPDATE:

Monthly Trading Service Commentary:

The Monthly Trading Service has 3 positions open for May expiry this coming Friday: SPX, RUT, and QQQ. All 3 positions remain nicely out of the money despite the recent weakness in the markets. Stair-steps of support exist below Friday's closing prices if the recent decline continues.

Friday's action was encouraging in the sense that it was not another strong day probing the lows printed earlier in the week. Markets are at an oversold condition now and choppy trading is expected for the upcoming expiry week. As a result, the technicals, probabilities, and micro & macro headlines provide a good level of confidence regarding our open positions.

We had searched for an additional May spread to be opened last week but could not find a prudent risk reward amongst the volatility. We did, however, identify some very attractive June spreads as a result of the rise in volatility and subsequent increase of OTM option premiums.

Firstly though, we must manage this last week of our existing May spreads. We have a solid level of confidence in the current May positions and their successful outcome. However, if things go awry and need adjusting, we already have rolls identified to June strikes that would keep the positions far OTM, thereby decreasing our risk, while also increasing our credit received for the trades, thereby increasing our profit profile. In short, we are comfortable with things as they sit right now.

Monthly Trading Service YTD vs S&P 500:

-5.03% YTD BookingAlpha Monthly Advisory

vs.

+7.51% YTD S&P 500

See Trading Record

Weekly Trading Service Commentary:

This week we opened a Bear Call Credit Spread on SPX which expired worthless for full profit, despite markets getting beaten down again this week:

May11 1325/1330 SPX Bear Call Credit Spread - expired worthless for +11.11% in 7 days.

We deployed the position as the market reacted strongly to the downside as a result of the April Jobs Data release. A safe, conservative opportunity presented itself to scalp premium from the rapid increase in Implied Volatility and we jumped on it. Ultimately, despite the printing of new recent lows this week, our Bear Call Credit Spread was never in jeopardy and there was no nail biting during expiration Friday - just the way we like it!

The Weekly Trading Service is back to 100% cash. We'll have to see what opportunities the market provides us as we have a couple plays on our radar for the new week.

Weekly Trading Service YTD vs S&P 500:

-8.02% YTD BookingAlpha Weekly Advisory Portfolio

vs.

+7.51% YTD S&P 500

See Trading Record

Check out the BookingAlpha Trading Record

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Subscribe today and don't miss out on your next profit opportunity!

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Up, Down, Which Is It?!?!

admin@bookingalpha.com (Trevor) — Tue, 08 May 2012 21:13:26 +0000

Wow what a day/week so far! After being down 15 handles in the S&P futures Sunday night, markets ground higher Monday closing flat to up. Monday night, futures were a little soft, nothing too nasty though, but then got slammed during the day today. However, more than 60% of the losses were made up by the close with markets closing only marginally in the red posting -0.4-0.6% losses across the major indexes. The Nasdaq was the biggest swinger, [insert your "swinger" joke here] from being down the most to closing down the least.

So what the heck is going on?! Our analysis reflects a simple digestion of the strong YTD gains but no major breakdown, not yet. Here's why:

1) The French elections were not a surprise to the market as they began being priced in last week.

2) Recent economic data has been softening but has not gotten "bad" yet thus far.

3) Earnings season is nearing its end but was received positively in general by traders.

4) Europe is under control (for now) with it's recently increased bailout funds.

5) China is still growing.

The S&P is down -40 points / -2.8% in the last 7 trading days. The S&P fought all afternoon and closed above the 1360 level today reversing major losses intra-day. Strong support remains in the 1350 area and below at 1345 and in the lower 1330's. Short term, we actually anticipate a bounce to relieve the oversold conditions. We were searching around for some new trades this afternoon for both Trading Services but elected to hold off for today.

Intermediate term, we are not calling for new highs out of the anticipated bounce. In fact, we are expecting lower prices, but not until a little later....like late May / June. It still feels like markets have a Bernanke / Obama bid underneath them.......for the current election year possibly; just calling the trading action like we see it.

Implied Volatility exploded today with markets pulling back which somewhat impacted the values of our positions. However, by the end of the session, time decay continued to erode our still far OTM positions and premiums of our positions are back in check. We are comfortable holding all of our current positions here under these market circumstances and don't anticipate any adjustments being required. However, we'll keep a close eye on them as always.

Thanks to everyone and have a great day!

05/06/2012 Market Recap: Markets Erase Last Week's Gains And Then Some

admin@bookingalpha.com (Trevor) — Sun, 06 May 2012 12:54:02 +0000

Broader Market Weekly Performance:

Dow -1.44%

S&P -2.43%

Nasdaq -3.39%

Russell -4.07%

www.BookingAlpha.com

Check out my latest interview on Benzinga and TraderInterviews.com

MARKET UPDATE:

Markets erased last week's nice gains completely and then some this week. The first half of the week was fairly quiet, even boring. However, Wednesday markets started softening and Thursday and Friday resulted in a full scale smack-down.

The Non Farm Payroll and Unemployment Rate reports were what spooked markets Friday as weak numbers missed lofty expectations. The size of the labor pool also shrunk which means the number of people looking for/wanting to work decreased which reflects frustration by job seekers giving up. Oil was bloodied Friday as well posting it's biggest daily loss of the year: -3.8%

Earnings continue to be strong but the labor market is definitely not as strong as many hoped; is that really a surprise to anyone though? One positive out of Friday's reports is that it inches the door back open for an opportunity for QE3.

All in all, markets still appear healthy and there many steps of support on teh downside if weakness continues. The S&P is only back to where it was 2 and 3 weeks ago and held the April weekly closing lows Friday. Strong support lies below at 1358 and in the 1350-1344 area, the location of the rising 20 week moving average and the July-August 2010 top.

Navigate wisely and stay profitable, my friends. Happy trading!

BOOKINGALPHA UPDATE:

Monthly Trading Service Commentary:

After a quiet start, it was a busy week in the Monthly Trading Service. Thursday we deployed 2 put spreads: One on SPX and another using RUT which created an Iron Condor with an existing call spread.

Friday, during the beat-down that ensued from the market open, we initiated an additional put spread on QQQ and closed the call side of the RUT Iron Condor created the previous day:

May 860/870 RUT Bear Call Credit Spread (part of an Iron Condor) closed for +9.52% in 7 days

The Monthly Trading Service now has 3 positions open for May expiry. The positions remain nicely out of the money and have strong support areas working for them if further selling ensues. Any relief bounce in the market, which is likely after such a sloppy end to the week, may provide a nice opportunity to leverage the current spreads into Iron Condors.

Monthly Trading Service YTD vs S&P 500:

-5.03% YTD BookingAlpha Monthly Advisory

vs.

+8.76% YTD S&P 500

See Trading Record

Weekly Trading Service Commentary:

This week we opened an Iron Condor Spread on SPX which expired worthless for full profit, despite markets getting beaten down Thursday & Friday:

May04 1350/1360/1425/1435 SPX Iron Condor Spread - expired worthless for +4.17% in 2 days.

We deployed the position as the market was consolidating and weakening approaching the to be released jobs data. A safe, conservative opportunity presented itself to scalp premium and we jumped on it. Ultimately, despite the butt-kicking that ensued Thursday and Friday, our Iron Condor was never in jeopardy and there was no nail biting during expiration Friday - just the way we like it!

Furthermore, we were able deploy a new SPX spread for the next weekly expiration, May 11, on Friday taking advantage of the further expansion in volatility and nice premium available far OTM.

The Weekly Trading Service now has one position open for the coming weekly expiration cycle and will be looking to potentially open 1 additional new position this coming week. We'll have to see what opportunities the market provides us, if any, for the new week.

Weekly Trading Service YTD vs S&P 500:

-10.87% YTD BookingAlpha Weekly Advisory Portfolio

vs.

+8.76% YTD S&P 500

See Trading Record

Check out the BookingAlpha Trading Record

Check out my latest interviews at TraderInterviews.com & Benzinga:

Subscribe today and don't miss out on your next profit opportunity!

Review us and read what other have to say at Investimonials!

Sloppy Day & Week For Markets

admin@bookingalpha.com (Trevor) — Fri, 04 May 2012 22:01:12 +0000

Although traders lowered the bar for the Non Farm Payroll Report over the last couple days, the report still stumbled. The result was a strong sell-off market-wide. Overall, the 4 major domestic markets fell between -1.2% and -2.25%. Europe was also dragged through the mud on the heels of the report closing sharply lower. Also noteworthy, oil fell than -3.8% on the day in it's biggest drop all year.

Our estimate for the NFP report was for it to meet the lowered expectations and not be too much of a market mover. However, in case we were wrong, we positioned properly in both Trading Services and were actually able to book profits on 2 trades and open 2 new positions, including:

Weekly Trading Service:

1) May04 Weekly 1350/1360/1425/1435 SPX Iron Condor expired worthless for +4.17% in 2 days.

2) May11 Weekly SPX Spread opened targeting +11% in 7 days.

Monthly Trading Service:

1) May 860/870 RUT Bear Call Credit Spread (part of an Iron Condor) closed for +9.52% in 7 days.

2) May QQQ Spread opened targeting +7.5% in 14 days.

Look for our Market Recap Update on Sunday. Thanks to everyone and have a great weekend!

Markets End Lower, 2 New May Option Trades

admin@bookingalpha.com (Trevor) — Thu, 03 May 2012 22:17:09 +0000

Markets were quiet the first half of the day but weakened in the afternoon. The Russel and Nasdaq were the heaviest losing more than -1.4% and -1.1% today, respectively. The Dow lost -0.5% while the S&P lost -0.8%. Jobless Claims fell more than anticipated (which is good) but a soft ISM reading overshadowed the jobs data. Tomorrow the Non-Farm Payroll numbers and Unemployment Rate will be released before the open and everyone is looking for direction. We still think the NFP will be somewhat in-line and the market's reaction shouldn't be too large either way.

The Monthly Trading Service opened 2 new positions today on SPX on RUT using May options. The new RUT positions created an Iron Condor with an existing position to leverage the already existing margin requirement.

Yesterday's SPX Iron Condor Spread in the Weekly Trading Service is in great shape heading into tomorrow's weekly expiration. The SPX is in the middle of the range of our Iron Condor so we have a lot of room to both sides for a large reaction to the NFP numbers if it occurs.

Thanks to everyone and have a great day!

Chop-Chop Goes The Market

admin@bookingalpha.com (Trevor) — Wed, 02 May 2012 20:41:12 +0000

We utilized the sideways chop today to open a new Iron Condor Spread for the Weekly Trading Service. There were some large volumes in weekly S&P 500 Index (SPX) options today so we jumped on to scalp some of the premium available.

The Monthly Trading Servicehas one position open (a RUT Bear Call Credit Spread) which is looking very nice with the current status of the RUT. We have some additional plays on the radar for the Monthly Trading Portfolio but are being judicious with our entry's.

Other than that, it was a pretty quiet today. The market took the soft ADP numbers in stride and the market basically closed flat on the day. The next 2 days will include the release of more job data including Jobless Claims Thursday am and Non-Farm Payroll & Unemployment Rate on Friday am. Today's weak ADP pretty much setup a soft report on Friday. The market continues in a range of S&P 1415-1390. A wider range also exists from S&P 1420-1370.

Thanks to everyone and have a great day!