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Option Trading Newsletter: January 23, 2015

Prepared by the good people at Random Walk, LLC.
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Closing Prices From Yesterday
The Real trading year likely began today.
I expect new highs in the near future with a few strong months, then a MAJOR correction by the summer. All the countries in the world are playing games trying to outsmart and “tinker” with economies instead of allowing the free market to determine where things should be.
All the countries are shooting all their financial bullets over nothing. When that currency is really needed the well will run dry. History has proven that financial engineering is as close to a science as the Ouji board. There are no free lunches, and creating anew (asset) bubble to inflate your way out of a previously created government bubble (housing) that bailed us out of yet an earlier government created bubble (and so on) never ends well. It just takes longer for the hangover to appear than common sense would dictate. There is money to be made on the upside, but real fortunes are going to be lost (and a few made) on the downside. Think 1987, but without a bounce.
Company News
First: POT Class
Scott says it is (in his opinion) 90+% likely that the real trading will now begin for the year. Random Walk has no opinion. Previously POT was demonstrating put on wide, condors all over the math, dominating as much of the strike price chess board as possible. POT people….he wants you to know he is now going to slowly build up steam and kick this in gear.
Second: Vegas Timing
This could not have happened at a better time for the Vegas class. We were a little concerned that this market was going to be stupid for another month.
Today’s Number(s)
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By |January 23rd, 2015|Morning Update|Comments Off

Option Trading Newsletter: January 22, 2015

Closing Prices From Yesterday

IMPORTANT Events and Facts.
Mario Draghi is speaking today at 8:30am eastern about bond buying for the ECB.
Canada lowered its interest rates yesterday.
The markets have had a range of at least 200 points every day this year.
The markets have not had this much volatility since 2011.

 
Yesterday
Psychotic on a […]

By |January 22nd, 2015|Morning Update|Comments Off

Option Trading Newsletter: January 21, 2015

Closing Prices From Yesterday

Today’s Number(s)

Yesterday
The markets are still nuts, but in a more muted way. The market opened up 70 points and proceeded to sell off. While selling off we made a low in the Dow of a net change of -166. From there we climbed right back up despite oil slowly falling. Oil closed down $2.46, and yet the markets made it back to unchanged.
After hours NFLX and IBM came out with earnings. IBM was average which caused the stock to run up $3 and then down -$3 (a range of $6).
Gold has made it up almost $100 this moth closing near $1,300.
TODAY
I am getting close to coming out of the January retirement. This market has the earmarks of wanting to go higher. Oil has been a lag on the market for months. Yesterday oil took a big drop of $2.46, about as big as oil ever falls in one day, and the markets worked their way back up. This has my gut telling me that there is a lot of buying underneath.
One fear the markets have to get over is what happens in Europe on Thursday. And given Dhragi’s ability to disappoint every time he opens his mouth, people are obviously cautious about getting over exaggerated. […]

By |January 21st, 2015|Uncategorized|Comments Off

Option Trading Newsletter: January 19, 2015

Random Walk Trading.com
Tuesday
January 20, 2015
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oday’s update is mostly the same as yesterday’s with the exception
of the “TODAY” and “POT” section. We were closed yesterday due to
the MLK holiday that the rest of the world doesn’t observe.
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Closing Prices From Yesterday
Today’s Number(s)
Yesterday
More craziness. The markets opened up a little, […]

By |January 19th, 2015|Uncategorized|Comments Off

Option Trading Newsletter:January 19, 2015

1-855-RWT-0008

Correction: I mistakenly forgot to mention in the Morning Update that the market is closed today in observance of Martin Luther King day.

Closing Prices From Yesterday
Today’s Number(s)

Yesterday
More craziness. The markets opened up a little, fell and then ran higher. At the end of the day the Dow was up 190 and oil was at about $49. The markets were down 226 points for the week.
TODAY
I have no idea. I expect more see-sawing for much of the week until this market finally makes a decision on what it wants to do. January months are hard to get a feel for. Sometimes they start out the whole year right from the start – but that is seldom. Other times they scare people to death that the end is near (like last year). Sometimes they do nothing.
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By |January 18th, 2015|Uncategorized|Comments Off

Option Trading Newsletter: January 16, 2015

Great Morning!
Closing Prices From Yesterday

Today’s Number(s)

Yesterday
History was made.

Switzerland detached itself from the Euro. This is historic and forced the currency to move down as much as 20% at one point. The Swiss Frank (CHF) has been attached to a fixed rate of 1.20 to the Euro; however, in a unexpected announcement Switzerland wanted away from the Euro. With the concerns over the EU easing combined with a Judge’s decision to let the EU buy bonds Switzerland felt it could not take the risk anymore.

Oil fell a little over $2.00 a barrel and gold ran up 2% to 1,265 because of this news.

The news also rattled the US markets as investors/traders spent the day see-sawing the markets up and down trying to determine what effects this will have on the US.

Bond dove again, this time the 10 year bond closed at 1.775% yield. This is insanely low, but the move does make “temporary” sense when compared to European rates. The Swiss, for example, have mortgage rates of 1.8% on 10 year fixed home loans.

– In all it was just another Frustrating January day that made no sense, and the markets could not figure out what to make of things. But this creates
TODAY
Thank God I’m Flat
The 6th day in a row down? At 11”00pm eastern futures were down -18 implying a -150 point move, yet oil was up $0.50. Europe is all over the place after the Switzerland currency issue as traders try to figure out what the next surprise is going to be.
In short….I haven’t got a clue.
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By |January 16th, 2015|Morning Update|Comments Off

Option Trading Newsletter: January 15, 2015

Great Morning!
Closing Prices From Yesterday

Today’s Number(s)

Yesterday
20,000 leagues under the sea, rather 200 points below the previous close.
E-mini futures were down 10 going into the open. The pre-market economic numbers of retails sales and December import prices disappointed so much that the E-minis fell another $10 points (a total of $20) right before the open. On the open the Dow fell 200+ points and picked up steam as oil backed off a little.
Then news that JPMorgan’s earnings were going to disappoint because of lawyer fees and accounts preferring online trading (to expensive brokers). This news was too much for the market as JPM fell $3.50 which helped send Dow down 350 points at the low.
At 2:00pm eastern the Beige book came out as a non-event, but oil started to run higher. I don’t know if it was the same culprits (Goldman Sac) that stated yesterday oil was going to $42 and sitting there for months, but oil ran up $2.40 at 2:00pm. This blew the Eminis up from down -$32 to down -$12. The Dow ran up 170 points from there.
Interestingly the after-hours crude market temporarily saw oil get to $50 even. So much for $42, huh? I honestly don’t know if I am angered or jealous of those who tell the entire world to do the opposite of what I want to do. Oh well, all I know is I am glad I no longer believe word they say. The last time they spoke of oil they were telling people to buy oil in the 130’s.
TODAY
I have no idea. I seem to be out of Lithium which controls my understanding of this bi-polar market. We were down over 650 points from Tuesday’s highs yesterday. When the market is ranging (in both directions ) almost 4%, no one can guess where we are going. I would say I am starting to take a bullish stance but I am not committed quite yet.
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By |January 15th, 2015|Morning Update|Comments Off

Option Trading Newsletter: January 14, 2015

Great Morning!
Closing Prices From Yesterday

Today’s Number(s)

Yesterday
Absolute mania. The Dow opened up 282 points and appeared to be happy there. Then when a measly little company like KB Homes announces that their profit margins are down a little, it took the whole market with it. It turned out that the rally was not as as strong and real as it appeared. The market’s selling increased momentum until the Dow was down 142 points, when oil came in to save the day. A late run higher in oil prices saved the Dow from further escalation down which I was concerned could escalate. At the end of the day it was a non-event. Just a lot of coffee and stress.

TODAY
I have given up trying to make sense of this. Oil is still playing a pivotal role in the markets, and is trading down a decent amount in after hours. This would imply a weak opening, but it is hard to tell. We are 400 points off the month’s lows and 400 points away from 18,000, and I can’t begin to guess which number will be hit first.

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By |January 14th, 2015|Morning Update|Comments Off

Option Trading Newsletter: January 13, 2015

Great Morning !
VEGAS: The February Vegas Class Itinerary.
Please note that I am working on slides, lessons and answers to people’s write in questions already. Because of market conditions the order of events may need to be adjusted at the last minute. In other words….to ensure the best class possible please assume the itinerary below is a guide that will change. If the markets are totally nuts I will discard the student’s questions and focus on the markets. That would actually be the best thing to happen. Then I will have a bonus session where I do an online session that answers the student questions that were submitted.

Friday Night Feb 20th, 2015
Yesterday

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Closing Prices From Yesterday

Today’s Number(s)

Yesterday
At least January is consistent in its stupidity.
The E-minis opened up $6 higher and then fell to a net of down -$20. Oil opened down about $1.65 which was enough for the markets to shrug off; however, when oil fell to a net -$2.50ish the markets wanted to fall harder – and they did. The Dow closed down about 100 points with some equities taking a bigger hit than others.
OIL
Much of oil’s slide was a result of Goldman’s downgrade of the commodity. Goldman stated that they think oil is going down to $42 and staying in that general area for at least 6 months. Once I learned that Goldman can be caught lying by looking for when their lips are moving, I became a better trader. But they do move the markets on their upgrades and downgrades, so one can not stand in the road when they are coming. Get out of the way as they pass, and then take the opposite direction usually works. This means I suspect oil is getting near a low. Goldman is probably very short the product and wanting to buy it back without moving the markets, so they get people to sell to them.

TODAY
It is still January so I am not putting thing out on a limb. I would say that this market is holding up pretty well considering it is taking its cue from a free-falling commodity. We also saw yesterday reports that ISIS hacked into US military Twitter accounts (Central Command) to get addresses and phone numbers, and the market held up well. It was no coincidence that Obama spoke about increased internet security the same day.
We have a TON of negatives going on in the market, and yet we are still only 360 Dow points off Dow 18,000. That would normally tell me to get long, but it is January and I am not doing anything stupid until after the surprise.

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By |January 13th, 2015|Morning Update|Comments Off

Option Trading Newsletter: January 12, 2015

Great Morning !
VEGAS: The February Vegas Class Itinerary.
Please note that I am working on slides, lessons and answers to people’s write in questions already. Because of market conditions the order of events may need to be adjusted at the last minute. In other words….to ensure the best class possible please assume the itinerary below is a guide that will change. If the markets are totally nuts I will discard the student’s questions and focus on the markets. That would actually be the best thing to happen. Then I will have a bonus session where I do an online session that answers the student questions that were submitted.

Friday Night Feb 20th, 2015
 
Yesterday

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Closing Prices From Yesterday

Today’s Number(s)

Yesterday
A joke – plain and simple. The first week of the year concluded with its unbroken 100+ net change day (again), but in no direction. It was not known until after lunch on Friday if the markets were going to be up or down for the first week of the year.
I may sound redundant to some, yet others may think this is the first time I am stating this, but….
January Months Stink. They are Amateur Hour
For the first time in 6 months I am glad a week is over with, and I feel dumber for having lived through it. Just look at the graph below and it will tell the story. Up 70 points one moment, and then down 200 the next.

TODAY
WHO KNOWS?
I will be honest and say the following:
At the end of Thursday’s run higher I thought the stupid in January may have ran its course early. I was almost convinced the end of stupid came and went early like the Chicago cold snap of -40 wind-chills (coincidentally also -40 in C*). Friday took me by surprise, and now I have to think the January stupid is going to continue.
OIL
Last week we saw oil having a diminished impact on the markets along with some consolidation. Yet things could heat up again. Iran and Venezuela announced Sunday that they “Vow to neutralize the oil price problem”. Whatever. And I am going to go in my time capsule back to the 5th grade and take on all the 8th graders at once.
Venezuela is an OPEC country, but they are not going to stop selling oil when their people are are on the verge of riots because they can’t get toilet paper. They do spit out quite a bit of oil, though – a surprisingly large amount. We receive almost as much oil from Venezuela and Suadi Arabia. As a matter of fact the US imports almost as much from Venezuela as they do from Iraq and Kuwait – two places our military already went to ensure a steady flow.
I don’t know what these two country’s plans mean for the price of oil, but it is evident many exporting countries are getting real tire of sub-$50 oil when they were enjoying >$100 only 6 months ago.

If I were an oil trader I would be expecting/cautious of a giant jump in oil if other countries jump on the bandwagon.
What a CIA novel-type conspiracy theory this is when Iran’s Ayatollah said (regarding the oil drop):
“This can only be a political act… Our enemies use petrol as a political lever
and have certainly a role to play in the lowering of prices.”
I would have to chalk up a HUGE victory (so far) to the CIA if they are orchestrating this. It kicks Russia in the balls. It kicks Iran in the balls and ass. Anyone we have a problem with gets a turn in the barrel. And oil did start to fall coincidentally around the time Russia shot down MH17, the Malaysian airliner. See my chart below. Okay, maybe I am in denial and I am a conspiracy theorist.
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By |January 12th, 2015|Uncategorized|Comments Off