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Why selling OTM spreads is guaranteed to wipe out your profitsTrading without a risk management is gambling. Gambling relies on hope. Selling OTM spreads depends on a 75% success rate and surviving a few big losses. The RR is very low if you are aiming to collect 25% of the spread. I traded 12 months solely on BullPut and this has taught me well. It's a losing strategy based on the misconception of high win rate and "consistent" income. Using ITM spreads, you can enjoy higher RR and live to make another trade. I took a calculated loss on AAPL with RR 1.6.
NASDAQ:AAPLLong
by tlcgharvest
BMW - VW (Correlation)Comparing the BMW chart to the VW chart it is striking that both price developments are strongly correlated to each other. Given the current spread between the two price changes in percentage, determined by using the closing price of the first day after going public, subtracting it from the current stock price and then subsequently deviding it through the first closing price, this offers us to greatly take advantage of their correlation. Obviously, it is likely that both prices are going to cross again in the future which means that all we have to do is shorting the BMW stock and buying some VW stocks in order to benefit from the decreasing spread between both prices. If we now charge both positions with the same amount of money and then close them when prices cross again, we are going to end up with 16.43% in profit.
FWB:BMWShort
by Lucas_Aschenbach
EURUSD: UpdateWe now have a confirmed weekly uptrend, after retesting support...our long trade is in good profit and we can let it run with minimal risk. I'll be trading the daily to catch multiple add on trades here and there as the trend unfolds (IF it unfolds as expected). The gold spread and the fundamental/macro landscape makes me think the Euro can rally while the uncertainty lasts, while at the same time, it's quite likely to see equities go sideways, and the yen go down. The Pound and the Euro can rally against all currencies meanwhile. Specially until the spread vs gold closes. Good luck, Ivan Labrie.
Long
by IvanLabrie
XME call spread option trade$XME is a weird one, ill be honest. on the Weeklies, the trend is up, but on the dailies its starting to look very top heavy. MACD is signalling a sell, The one bright thing here is that we are near some major support, last attempt bounced this baby for 12 days. A break below this lever will open up a clear move to the 27 handle... The idea here is to Sell a Call Spread in June -32/+35 with mid-price of 45 cents. Thats an ROI of 15% for a 59 day hold
AMEX:XMEShort
by MaccabiCapital
Adobe Trend Reversal or Buy Opportunity? Adobe (ADBE) exploded upwards on Friday, March 16th after reporting their earnings. At the same time, a huge reversal bar formed on the daily chart with the close at $126.94.  The following trading day’s bar closed just below the low confirming a possible reversal of a pretty massive uptrend the stock has been under over the last months. Not to mention, Adobe and Microsoft (MSFT) have announced a joint venture in customer engagement and marketing, as well as an Adobe announcements of new cloud services.  The cloud services could become a new commercial source of revenue, especially with Adobe’s niche in the creative marketplace as opposed to cloud service providers like Amazon’s (AMZN) AWS. But is it time to go short and sell? Well, for now, yes, or with less capital risk, fade the reversal.  Fundamentals for the company are strong, with growth showing in the long term. But our strategy is a swing strategy to take advantage of lower risk opportunities.  This trade with a stop loss above the high of the reversal bar at $130.30 is definitely not the lowest risk of them all, but a credit spread might suffice before a high potential for bullish continuation in the long run. If you’re an options player like myself or a straight underlying trader, then here’s a few sets of trades depending on your investment style. 1)      Short the stock Entry: any price today Stop: $130.31 on market close Trail it after two more days of closing bars until breakeven. If the trend has started in the downward direction, trail it to our middle moving average and follow it until the bulls take over 2)      Credit Spread Sell X Call, 21 Apr 17 Exp, 130 Strike Buy X Call, 21 Apr 17 Exp, 135 Strike Max Profit: ~13% Return on Risk/Investment 3)      Stay on the sidelines, and wait for a buy signal fractal for medium/longer term trade Buy X Amount of Calls, 20 Oct 17 Exp, 115 Strike Again, from a technical standpoint, we currently rate Adobe (ADBE) a Sell in the short term, but the bullish uptrend has a high likelihood of continuing in the medium to longer term due to the fundamental outlook and growth opportunities for the company. Until our next article.
NASDAQ:ADBE
by EdgeAnalytics