Follow Us

Earnings Season Is Here

As we officially enter into Quarter 3 Earnings Season this week, and are currently sitting at an all-time high in the Markets, we must prepare ourselves for what is likely to be a very interesting, volatile and profitable month of trading.  If you are not familiar with the ETNtrade style of trading, you may be surprised to see that we primarily use weekly expiration options, out-of-the-money spreads and in many cases, cover both possible directions the stock may move.  While many Traders struggle to find a consistent statistical advantage when trading during Earnings, ETNtraders are very comfortable with our approach, our simple analysis and calculations, and the trades we will profit with from week to week.

So, what is the secret sauce that allows ETNtrade Members the opportunity to make 100-300% ROR in 2 to 4 days?  It all boils down to a few simple calculations that allow us to make important decisions on what we think the stock will do, and therefore what strikes to use, based on what the experts reveal to us. It is actually a very simple process, but it takes practice and patience to master.  Let me give you an example of this type of trading style:

On Wednesday of last week, we identified that the market expected WFC to move approximately $1.17, or 2.1% by Friday at close. Now, it did not say that it was to go up or down by that much; it simple stated that they expected it to move either up OR down by 2.1%. So, with WFC at 55.50, we positioned ourselves in a trade that allowed us to not lose our max risk as long as the stock moved only $.50 either way, break even if the stock moved $1.00 either way and max 100% ROR on our investment if it moved $1.50 either way. Think about that for a second… As long as the stock does what the Professionals think it will, we make money! That is a perfect scenario.

So, what happened? WFC ended the week at 53.69. The trade returned us 100% on our investment (we put 4 units on the trade, or 4% of our portfolio). So, we made an overall 4% return on our portfolio in TWO DAYS. Annualize that one.

In my humbled opinion, if you are not trading this way, you are gambling. We have been proving these techniques to be profitable year after year since 2009. We will be hosting a 2 Week Training Series in the coming weeks, so if you are interested in joining us for that, make sure to sign up for the upcoming free introduction to ETNtrade webinar on the right of this page. If you have any questions, of would like to discuss opportunities in becoming a Member, please feel free to ask. You can email me at Dave@ETNtrade.com.

I look forward to trading with you all in the near future. Let’s finish 2017 with a bang!!!

Happy Trading,

OptionDave

The Trump Rally

After what many are calling a turning point in the early days of the Trump administration, the Markets are breaking records once again.  But is it a good thing for us Option Traders?  Let's take a closer look.

President Trump addressed Congress last night, and the Markets are responding.  As I write this, we are up over 300 points on the Dow, which is looking to finish at a remarkable 21,000+ today.  So what is behind this move?  Well, many don't realize that we have the first true Businessman running the country.  Yes, the Bush family was involved in the oil and sports businesses, but they were also Politicians.  Sure, some Presidents owned farms or law firms, but that is nothing compared to what we have here.  So, it is really not that big a surprise that the Markets would react positively.  But will it continue? 

A continuation of this Market Rally is certainly something no one wants to bet on, or bet against.  It is inevitable that the Markets will fall at some point in the next 4 years.  While I do not give all the credit to the sitting President for a rally, I also do not blame them for a tumble, unless of course they specifically say or do something to cause it.  That was the case today.  The pro-business/ pro-America comments made by the President had an immediate impact on Investor sentiment, and thus stocks. Option prices spiked early in the day but have settled down, which is a normal response during a Bullish Market like we have here.

While I firmly believe we are due for some profit taking, I for one am not putting my money on it.  We will continue to be non-directional, or in some cases hedged-directional, and grow our portfolios regardless of the Market direction.  On Monday alone, our trades netted a 24% overall return, and our trades today are positioned to add to that healthily. 

If you are not on board now, what are you waiting for?  This is the best time ever to be investing in Options, and we are always here to help when you are ready to learn.

Happy Trading,

OptionDave

 

Election's Effect on the Market

In one of the most highly contested elections in United States history, the results are in and Donald Trump is primed to be the next President.  No, this is not a political forum, so we are not about to talk politics.  Instead, we will do what we always do here at ETNtrade; let's talk about how we can profit from this information.

Typically, when a Republican is elected to the Presidency, stocks drop.  That did not happen in this case. Why?  Is it because for the first time in history, the President-Elect is a PURE businessman (yes the Bush's were businessmen prior to entering politics but they were indeed politicians as well). Maybe the Market is simply going up on the rumor, just to be ready to sell off on the news. Or, maybe this is a sign of what is to come and the future is bright.  Instead of asking why, let's ask... "What is next"!

Two sectors that I have my eyes on closely are Defense and Financials.  Let's start with Defense.  Already, rumors have it that Trump is highly critical of many of the deals currently in place for defense spending, such as Boeing's deal to build the F-35 fighter jets. If he can successfully negotiate down those deals, outsource them to other companies, or maybe insource them, what will that mean for companies like Boeing, Halliburton, Lockheed Martin, etc.?  I think there is a beautiful short opportunity here and we will all be kicking ourselves if we stay too blind to take advantage of it. 

The other sector I mentioned is the Financials.  Obviously, the elephant in the room is the FOMC.  Will they raise rates or not.  How would that effect stocks?  Well, it all has more to do with future spending/ cost of spending than anything else.  The one sector most vulnerable is the Financial Sector.  Cost of borrowing can be a double edged sword for the Financials, as it cost more for them to borrow yet they collect more on their loans, but if you look at the charts, it is hard to make an argument for anything but a glaring downside.  The only question is... WHEN?

So that leaves us with the Market itself.  Personally, I am hedged for a Market Selloff.  It will happen, but knowing when is half the battle when it comes to trading options.  The best bet right now would be January Week 4 options.  Buying Puts, Put Spreads, Put Flys, etc. using that expiration will allow one additional week past Trump's inauguration.  That should be enough time to give the markets a chance to react.  There will be two FOMC meetings between now and then and that too could help.  Holiday numbers will be out, and I only see AMZN being a winner this holiday (their percentage of overall sales so far is staggering). 

While I do not give specific advice, and this is not intended to be such, I am very excited about my downside trades on XLF (Financial ETF), BA (Boeing), HAL (Halliburton), LM (Lockheed Martin), and DIA (DJIA ETF).  Using Out-of-the-Money Put Spreads make these trades very affordable, super profitable (over 200% return minimum), and very probable given all that is surrounding them.  I look forward to checking back in with you all in January with some results. Until then, just remember that there are three types of people: those that make things happen, those that watch things happen, and those that say “what happened”. Which one will you be?

Happy Holidays everyone, have a great New Year, and let's make 2017 out BEST YEAR EVER!

What Do Option Trading and the Olympics Have in Common?

Many people come to ETNtrade wondering how me continue to create returns that outpace our competition by such a wide margin.  Well, in the spirit of the Olympics, I thought I might take a moment to explain.  And let me warn you, the answer is so simple that it might shock you.

It all comes down to a proper mental approach and preparation through practice.  Let's start with Practice.  Many people tell you that practice makes perfect.  Well, let's ask them this:  Do YOU practice?  I find that most "experts" don't.  Why not?  I can promise you this... there is no one reading this post that does more practice trading than me.  I practice what I preach.  But I don't just practice, I perfectly practice.  That is right... practice will never make perfect unless you are practicing perfectly.  We do not want to create bad habits, so make sure you are practicing the right way.

Next we have preparation. Being prepared mentally is very important.  Just like the athletes we cheer for in the Olympics, the right mental attitude is critical for profitable trading.  This is why 1 of the 7 segments of my Boot Camp Training is dedicated solely to Psychology.  I feel it is that important.  As we go through our trades with our Members on Mondays and Wednesdays, we already have an extensive watch list put together (and of course I share mine with our Members), we research each stock in depth, and we spend much of the 2 hours of Live Trading analyzing and preparing our trades.  So what do we look at?  The answer is probably not what you think.

The most important part or our analysis is measuring what the Market itself thinks the stock will do.  While most people sit down scouring through financial numbers (as if they really understand them), and reading what "analysts" have to say about the stock, we look at the numbers.  There is so much that can be determined just by looking at the options on a stock.  Many of these things will be discussed on our Free Live Trading Classes this week.  I would love for you to join us by clicking the link to the right of this blog.  If you cannot make it, let's set up a time to talk.  You can always contact me directly at Support@ETNtrade.com.

See you soon.  Happy Trading and God Bless,

OptionDave

President and Founder of ETNtrade

 

BREXIT and How It Will Affect Us

Now that BREXIT has come and gone, and some would call it a surprising result, let's focus on how this will affect Option Traders heading into the coming weeks, which will include the start of Earnings Season.

First and foremost, RELAX!!!  The Dow is only down ~100 points from where it was on Thursday of last week.  That is right... 100 POINTS!  All this yelling and screaming on TV would make you think it was Armageddon.  But that is simply not the case.  There was a significant amount of buying heading into BREXIT, and since the result they were looking for did not hold, we sold back off.  That is it! 

Now that we are all breathing again, there was indeed one huge effect on options:  The VIX! The VIX has almost doubled since the low on June 6.  It is closed Friday, June 24 at a ripe price of 24.74.  This is scorching in relative terms, which means most options will be pricey going into Monday.  We will see what the Market has to hold for us next week, but if it continues to drop, we will see these levels stay up here.  I predict they will come down a bit personally, but that is just my 2 cents.

So, what do we do now?  Keep in mind, high volatility levels mean high premiums.  Most people say "Sell high premium and buy low ones".  I am not in that camp.  As a spread trader, we are buying AND selling, so the premiums will be high on both.  The only real effect inflated premiums will have on our trading is how far out you might have to go to get a good risk to reward on an OTM Debit Spread or RIC.  Don't get greedy.  This is not the time to try and hit a homerun.  Be conservative on your strikes, look to hit some singles and get some runs in.  Until we see what Monday has to hold, I also would not be jumping on the Iron Condor bandwagon just yet either.  Yes, they will work great if things quiet down, but we have yet to see if that will be the case. Monday will be a big telling sign for just that.

So, in short, don't panic, keep doing what you know works, hedge and be patient.  If you can manage those few things, you will be very happy come week's end.

Happy Trading,

OptionDave

ETNfree

Next Free Webinar Event:

 The ETNtrade Trading System

Focus: Live Trade Intro Session

Thursday, October 26th @ 1:00pm ET

Click Here to Register

ETNnewsletter

Sign up for ETNtrade's Free Newsletter to receive:

  • Updates on current trends
  • Real trade results and analysis
  • Upcoming watch list candidates

ETNwatchlist

Login Form