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Friday, February 28, 2014

WHY Options and WHY NOT Stocks?

Hey, traders ask me all the time: "Why should I trade options instead of stocks?"

There are a ton of reasons for trading options, some of them listed throughout this blog.

I'm going to give you a couple of reasons why you should NOT trade stocks, if you'll just take the time to watch a couple of videos. I know you have to watching your nightly news so you can't be totally ignorant of all this, to begin with...and it certainly makes me wonder...why aren't you trading options? When you do it the Tasty Trade way, you are Selling Volatility, not buying into a company's reputation, information, or the direction of its stock.

PBS/FRONTLINE: To Catch A Trader (click to open)

If that one got your attention, here's a Tom Sosnoff video about the SEC that might roil your blood as well.

SEC Front Runner (click to open)

Friday, February 7, 2014

Karen, the Super Trader is back!

Watch on your computer or your Roku (hooked up to your TV), but don't miss this 3rd interview (the other two are on YouTube) with Karen, the amazing option trader who inspires us all. 8 p.m. EST (Tasty Trade is out of Chicago)

Saturday, February 1, 2014

"Sunny Side Up" - an Earnings strategy for upside play (new Market Measure on Tasty Trade)

To see an index of the articles posted to this blog, go HERE

I'm in love with Earnings plays because you play them overnight, and the aspect of "fast" success really does it for me.

On Tasty Trade, they presented a new Market Measure Sunny Side Up which intrigues me. Watch the video and see for yourself.

First they did a 3 year study: the first test which loses money, and then by simply using the correct probability, the same strategy becomes a winner~!

In a nutshell, using large, high volaility stocks (likes GOOG, NFLX, PCLN, etc.) the night before earnings,

1. You buy a debit spread. Buy one leg in the money, sell one leg out of the money. You will pay for a debit for that spread. (for example $5.00).

2. You go to your option chain and find an out of the money Call that has an 84% probability of being OTM, (or 16% probability of being ITM at expiration).

3. IF THE CREDIT YOU RECEIVE FOR #2 IS EQUAL OR MORE THAN THE DEBIT YOU PAY IN #1, THEN DO THE TRADE. (In my example, the credit would need to be $5.00).

There is a very high success rate in doing this trade IF YOU MAKE SURE THE SHORT NAKED CALL (#2) has an 84% probability of being out of the money.

I'm going to paper trade it a few times just to see for myself.