Jeepers! I wasn't terribly upset by the market action until I read your first paragraph, Jeff. I am glad that I know which side of the trades to be on and to stay diversified.

Thanks for your blog and congrats on the honor!

Hey Big Guy!
Congrats on making someone's Top 100! You'll always be #1 in my book.

Jeff,

I would be happy with #26. My wife has said repeatedly that I am a #27. Go figure.

Kohler nice touch with the rounders video. I think all of us can identify somewhere along the line. Congratulations on the ranking. I can only imagine you have 25, 24, 23 and the rest of the blogs in your sight. Take great care.

Jeff,

I watched Tom Sosnoff's Master Talk this afternoon about volatility and he seems to think that the market is overdone here and that volatility will come crashing down in the next week or so based on the price of vix options and the spx futures vs spx cash. This sounds like the opposite of what you are hinting about in your post.

Did you (or anyone here) see this presentation? If so, I have a couple of questions on a strategy using the indices or their etfs that he advised we do to hedge against a sudden drop in volatility.

Jeff-
Congratulations on the ranking!

Great video. A great close to this crazy week. I'm feeling a little like Matt Damon after he got punched in the nose. ;-)



Finally, I think, my life might be slowing down a bit and I can get back into the swing of things and start contributing to the blog again.

Have a great weekend Option Addicts. Take a break and come back refreshed!

Here's a quote that I think might fit all the chaos this week.


Get your facts first, and then you can distort them as much as you please. - Mark Twain


liz

hello all,

Played the slots at Twin River in RI last night and made a 50% return on my money. Okay, I was only playing with $20, I'll admit it.

Loved reading all the banter while I've been traveling. This is an awesome community. Thanks everybody!

Kim
aka Va Beach Girl

Jeff your words are always calming to me. This week(last week) have been crazy. I'm so tired of all the whipping back and forth. my account is down then up then down. at the end of it I broke even. almost feels as if I make a profit ,I sould take the money and run intra day and not wait till the end of day(to trade).

Speaking of realty stocks, I got into PSA around 76 and today had a nice drop $4.25, but in the after hours trading it said up $4.25. Could this be a
mistake or did I just get kicked again?

Long: the days of a consistent trend
Short: whipsaw and volatility

You MUST pay attention when something is so extremely volatile! Bush's people are on board this stock, if you follow the link on paragraph 4. Is the neocons responsible for this?

SWC is incredibly volatile! Hammered down half from the $16.47 high in just three months, Bottomed at the $8.03 on this Tudesday before the earnings conference call, immediately rallied HUGE next day to high of $11.04 and settle for a 20% gain at $10.40, flat on thursday, Rallied Friday moring to high of $10.84 and then plummeted to the low of $8.38!!! Such a stock with extremely narrow floats traded on huge volume and huge swings up and down. I bet you never saw anything like that!!!

It's a swing trader's PARADISE! I would guess most day traders would LOVE to see such volatility. Such huge daily swing creates huge profit potentials if you can do it right.

This is an incredible stock worth paying attention to. Spend your weekend study it. Maybe you can swing trade and get a quick 20% out of it in one day! But the biggest gain will come from holding for long term. Tell people about this interesting stock.

Wow, BUSH's people are behind this stock???

If there's ONE guy who I want to follow, ESPECIALLY putting my money behind, it's Bush.

Hey JJ- Do you think I should put my order in right at the open Monday?

Spammer.

See Jeff, this is what you get when you make the Top 100 blog sites.

Brett,

Crazy, Huh?

This comment has been removed by the author.

Well, take a week off for vacation and amazing what all breaks out. Anyway, I kick in my support for you, Jeff, and all of the help you have been in helping me achieve my personal goals in trading. I have yet to get to where I want to be, but I have come a long way from where I have been. I am sure many echo that sentiment.

I really enjoy this blog and the feelings of solidarity exhibited. I hope it only gets better.

Looking forward to the week ahead and learning about economics in this real live case study. Wish I would have been exposed to this 15 years ago. I think it is fun to listen to the MarketCast and see what you and Eric have been covering for about 2-3 weeks finally hit the main stream media. This happens time after time. They are always a step ahead. We are truly blessed to be under the tutelage of your great and generous minds.

Have great weekend.

Long: Weekends
Short: 100 degree weather in Indiana

Just a masterful exchange Brett and Jeff. Hyperlinking to yourself three times…good stuff.

Honest to God, I love this site.

***********************THE ANGRY TRADER**********************
The Dark Side attempts to overcome the Light side

Utley was behind the market mess. He knew it. As Kohler walked from the parking lot to the office, he wondered who had decided that a long, dark path was a good idea. As he walked, he heard a slow, methodical breathing behind him. “Luke” he heard. “Luke.” The raspy breathing brought back horrible memories. His father had been lost in a diving accident and the sound was just like the sound that scuba gear made. Pffffsh… pshhhhhh. “Luke…. Luke.” The sound seemed closer. He turned suddenly and there was the dark shape he’d seen in his dreams many times. A dark, hideous form that could only be The Lord of Darkness he had heard so much about. Pfffsss… fshhhhh “Luke… wait up!”

“Stop calling me Luke” Kohler yelled. “And who are you?”
“I’m Garth Trader” the voice replied “and I’ve come to take you to the Dark Side.”
“Funny,” Kohler replied “but you look a lot like Eric Utley, to me.”
“Well you’re sadly mistaken,” the voice replied “I’m Garth Trader, Evil Lord of the Dark Side. And I’m here to covert you to the Dark Side. You are the chosen one and besides… we need you.”
“What do you mean the chosen one? My names Jeff and I trade options.”
“Well… not exactly. You’ve been the chosen one for a while. We, at the Dark Side tend to have a poetic side, and Luke rhymes with a lot more stuff than Jeff. Deaf… that’s about it. But Nuke, Duke, Cuke, and my favourite…. Puke… all rhyme with Luke. My first book of poems was a best seller, but everyone got tired of hearing about deaf Jeff… so we named you Luke. All the rest of my books have been runaway best sellers. Blame your Mom.”
“Well, I’ll have to think about switching to the dark side” replied Kohler. “I’ve got rather a lot on my plate today and I’m not so sure it would fit into my trading style.”
“Here, take my card” replied Trader. “Take as much time as you need, but give me a call. I think you’ll find the Dark Side quite lovely.” He handed Kohler a business card. It was pure black with no writing.
“Hey wait a minute.” Kohler called out. “This has no writing on it.”
“Well… actually we ran into a bit of a problem there.” replied Trader. “With us being the Dark Side and all, we thought the black card made sense. But that used up all our advertising budget and we didn’t’ have enough money left for a light colored ink. So we had to go with black.”
“Well that sucks” said Kohler. “I can’t see what your phone number is."
“Well if you switch to the Dark Side” replied Trader, “you can read people’s minds and you don’t need their silly little cards."
A sudden flash went through Kohler’s mind. As a child he’d had a goldfish and a turtle. Over time, he’d realized they were plotting to mess up his homework, so he’d had to flush them down the toilet. He’d thought it was just a coincidence, until a few years later their dog had started slamming the toilet lids closed whenever he was in the house;. He’d realised that he could read the dogs mind…. But the dog could also read his. As he grew older he found he could read dolphin’s minds, then lawyers, then pipe fitters, then finally he discovered he could read option trader’s minds. Could it be that he might be able to read the Dark Side’s minds too?
He headed home to his devoted wife. Amber made tuna fish sandwiches daily, that he could hurl at unsuspecting folks who pissed him off. “Hi honey” he called as he got home… “you’ll never believe what happened today.”
“Well I ran out of mayo, and I’m stuck with this generic spread.” she replied. This wasn’t good. The Angry Trader didn’t need an Angry Wife. “This is Bull. Where do I Put this Spread?” she asked.
Kohler’s head started to spin. Somewhere down in his toes, an icy coldness started to work it’s way up to his knees. “Bull…. Put…. Spread?” Kohler couldn’t believe this was a coincidence. He knew Garth Trader had to be behind this. In an attempt to change the subject he asked “Were there any calls while I was out?”
“Why yes, honey” Amber replied. “Raimo called and said to Call him. He’s got a Bear at his Spread that he wants you to come out and see.”
“Bear…. Call….Spread?” Kohler’s head spun even more. He could feel the evil darkness spreading up his legs to his arms.
“Jeff? Jeff? Jeff?” Amber’s voice was getting more and more distant.
“Luke, Luke, Luke…” the strange voice seemed to get stronger. “We will take you to the dark side.”
Can Kohler resist the dark side? Can Amber pull him back? Stay tuned to…… The Angry Trader.

LSHMFH! Chris, that was hysterical. I knew there was a reason I wanted to come in here at midnight. Thanks for a great laff! Garth Trader....priceless!

Brett-

Love your sarcasm!

liz

Chris-

I can't wait for the next installment. You are so crazy. Love it!

liz

Jeff,

That post/ video simply hit the spot.

Thanks

Wow, Chris. Again, all I can say is wow.

Chris, that was great!
Really, you should write a book.
You & Douglas Adams have a lot in common. Fortunately, you're still alive.

:-) Pat

I really can't believe how much diverse talent we have at this site. That was great Chris!

Chris, worth the wait. I have no idea where to find the time...
You know some of this sounds like I have heard it before but I just can't put my finger on it. Hummmmm...
I feel the sudden urge to watch Star Wars for some reason. That reading lawyers minds is most impressive. If you had said reading their heart, now that would have been unbelievable.

WOW CHRIS AND JEFF

great stuff chris!!!as always

Jeff,,,,I think they made a mistake on the labeling of that TOP 100 list,,,according to the way i look at it you're #4,,,if they had started with option sites instead,,,that's where you would be,,,but even that is a mistake,,,your #1 in our book!!!


sue

Doji Girl- If what Jeff says is true- market tanking, and if what Tom says is true, volatility tanking, sounds like a good time to sell naked calls, although that happens to be Jeff's most hated trade.

Excellent, Chris!!

Chris- Wow! Is that what pilot's do when they're stuck on the runway? Awesome job. You definitely have a God given talent for the written word. Now, if you could pull some strings for at Logan airport where I'm currently trapped I would be forever grateful. Computers are down at Air Tran. Grrrrr!

Kim aka VA Beach girl

Chris,

Extremely creative story. Loved it!

--Patti

DG,

I saw Tom Sosnoff's presentation. I may be able to answer your questions from my notes...

--Patti

Chris, great post! But... can you trade as well as you write? You have way too much time on your hands and way too much space in your head. Garth Trader! Fantastic. How long ago did Catherine start hitting you with those hammers anyway?

Keep it coming.

Stan,
Tom said NOT to sell naked calls...but to sell call spreads which would allow you to sell the high premium and that will cushion your long call side so it doesn't lose value when the volatility goes down. That part I understand.

My question, Patti, is doesn't that seriously limit how much money you can make on the trade if the market goes up? This is where I get lost. I think this is structured as a debit spread (bull call) but I don't know how to figure out the R/R or numbers on this.

Anybody?

FYI.....since jeff has made the "big time" and there is more traffic on the blog, including spammers, i have removed my last name from my profile.....i'm not sure if it really matters or not, but just incase...some of you may want to do the same....

Jeff... congrats on making the list, you da man !!! can't wait to meet billy jean

DG,
This is why I wish I was going to Chicago. I'd like to get a bit of an insight to this side of trading. I have been so focused on option trading (the "straight up" style that Jeff so loves) that I have ignored that side of the equation. One day when I have more time...

I am worried about tomorrow. I have been completely away from the computer during trading hours this past week. With this volatility I'm afraid any stops will get activated no matter what happens to the market. Tomorrow I leave Edmonton at 8:00 AM and get back to Toronto at 9:00 PM with no time all day to fire up the computer.

EEeek!

Hope to be able to be online starting Tuesday. Oh by the way... no scuba gear was damaged during the writing of my previous posting. It got away on me a bit, I'm afraid.

Doji Girl,
I also had listened to Tom's presentation and was just reviewing the SPY spread with the numbers from this evening on TOS.
Bull Call Debit Spread SPY Sept.
146/149 Currently at 1.60 Debit (cutting some of the spread on order)
Max Loss (Debit)= 1.60
Max Gain (spread - debit)= 1.50Reward to Risk Ratio: .93 or approx. 1:1
Break even(long call+debit)=147.60

So, yes a credit spread does cap your upside potential(ie if breaks above$149 (& stays), but you are playing probabilites and banking on probability being on your side. The probability of the sold call expiring worthless is 64%.
You also need rules about how you manage or exit a spread. IT teaches to do stops by S&R. So what % of a break of support on this play would have you exit? I see support at $144. Do you take profit at 60%/80% of max gain and move on? or by technicals? etc., etc. Or take a more hands-off approach.
The current cost of the 146 OTM call is $4.60 so at expiration the SPY price would need to be at $150.60 to break even and higher to be profitable; therein lies the volatility crush potential.
This is a more aggressive spread as the long call is OTM, so he is definitely bullish on the underlying due to all the reasons he stated in the presentation.
Hope that helps a bit with some of your questions. Anybody else have thoughts on this?

Loretta

Doji Girl,
Just to clarify:
On my prior entry the sentence talking about the cost of the 146 strike & break even at expiration is contrasting a single directional play vs. the spread & how volatility is impacting directional strikes.
Also correct to state: Yes, credit & debit spreads cap your profit potential.

Loretta

Loretta,
Thank you for the excellent explanation. So if I'm understanding this correctly, he is bullish on SPY but thinks that it it will expire somewhere between his long call of 146 and the short call at 149.

Chris, Your too Much! He,s got a bear at his spread! I'm still laughing. You make my day! Thanks!

DG,

Loretta's explaination was excellent. Thanks Loretta!

I got that Tom said to sell premium to offset volitility. When it contracts and you have directional trades, you lose big time. Even though you cap your profits with a spread trade, the reasoning is that you won't lose as when holding a deflated directional play.

Here's my understanding of setting up a September credit spread. Say you set one up today, you have the potential profit in your account immediately. Then when the volitility deflates - a expected during this week - you will have locked in more profit than you would have if you waited to set up the spread at a later time. And you would be profiting from the drop in volitility enough that you could close out the trade early.

Does that sound right?

The recorded talk is now posted on the IT site for everyone to hear.

--Patti

Can someone tell me how I can take advantage of Jeffs statment - Is he just shorting stocks ? - Invest that dollar in shorting the US markets

DG,

I think it was you that mentioned Jeff's price patterns classes in IT. Are you talking about Master Talk, or something else? I'd really like to be involved in anything that Jeff is teaching.

Thanks, Kim

Kim,
I'm not sure what you are asking. Jeff teaches Price Patterns and Master Talk. The 'sell premium' thing we were discussing is a webinar that Tom Sosnoff from TOS gave on Friday after the close. You can see it on the archived Spotlight sessions on IT home page.

Kim,
I think what you are talking aboutis Jeff's price pattern class. I am planning on trying to listen (probably the recorded version), too. He teaches it on Tues morning, I believe, at 8:30.
If you go to your Investools website and click under trading rooms and Advanced Technicl Analysis, you can find his class.
Hope that helps.

Michelle

Jeff,

Congrats!!! our site is on top #26.

thanks, Meena

DG-

Sorry...this was a question based on a discussion from a couple of days ago, not Tom Sosnoff's webinar. Michelle's got my answer.

Michelle-

Thanks! That's what I was looking for.

Kim

I checked out some of the other blogs on the top 100 list. Interestingly most don't post daily and almost none have an actively posting community. It's nice to be recognized but in terms of value this blog is #1 on my daily reading list.

MikeH

Brett - I took the ROG trade last week do you think the double bottom reversal is breaking down here ?

Thanks

Bob Raimo,
I think you said you were on vacation. Question: TRMB you mentioned was a flag. After the huge drop Friday, where is support?
Where do you measure the move from at this point? I am not playing it, just studying it so I can learn more.

Michelle

Arty-

THE PHOENIX is rising!

David,

What do you think?

Brett,

I sensed the Blue rising. But what about the VV% Change?

And what about my VRTX?

"God I admire you"

ARTY

Brett, it looks like there is some support around $38.50 back in late July. I've recently learned about reversal patterns but am a little unclear as to when the pattern is broken. Any thoughts w/be appreciated.

Brett,

I have a question on exits. On a trade like the ROG trade. If you would have gotten in on Friday at support and saw the action today, would you still hold till the end of the day to decide to exit? Is there a time or circumstance where you may deviate from the rule? I paper traded this one and it is a perfect example of a great entry but am not sure how long to wait to get out. Do you always wait until the end of the day?

ROG hasn't broken down yet, b/c the day isn't over yet. That's all all I can say about it.

FLR...know about it.

Arty,

Thank you very little.

Brett,

Thanks. I didn't mean to be so redundant. This is a point which I have had trouble with and just wanted your take on how you handle it. Sorry if I offended in any way at all. It takes me a little while to get the concepts down into practical application and I respect your opinion and learn a lot from watching you handle different trading situations. That is why I asked.

Anu

Anu-

I'm not offended at all. I'm making the point for everyone here that:

1) You need to make the decision whether you're going to use intraday prices or closing prices.

2) Once you've made that decision, you need to be consistent.

When you can master this discipline, you will have one of the key components of your trading system in place.

Sometimes you will be right to exit intraday, and sometimes you will be wrong. However, if you take closing prices only (which i do), you will NEVER be whipped out of a good trade. The philosophy is, you never want to be kicked out of a good trade too early.

Now, there ARE exceptions, and those are obvious. If a stock gaps down and retests the gap and fails to break through, and volume is excessive, you can then bend the rules. You will develop a feel for breaking the rules, but the more disciplined you can remain, the better your success will be.

Having said all that, I sold ROG when it was $38.50.

Just kidding.

Brett,

Thank you so, so much. Your help is really appreciated.

Anu

Brett,

Another basic question. When you draw a line in the sand for an exit, Have you found that using a percentage break either below or above the S/R line is more effective to keep you in a good trade or do you simply exit at any close below/ above the S/R line?

Anu

My $0.02 -- I agree 100% with the idea of waiting to the end of the day to decide if you need to exit. Jeff explained it once in a way that really made sense to me. That is, you only want to exit if the trade is wrong. How do you know if it's wrong? It breaks support (or resistance). But a break of support/resistance is just like a "breakout" and you really can't know if it happened until the end of the day in most cases.

Hard stops and exiting intraday never worked for me. Every time I've reverted to it, I've been sorry. Like Brett says, consistency is key. Of course, you have to factor in the risk of waiting because in some cases it might go big time against you and not come back.

Brett, thanks for the reminder about rules for exits. I am trying to master, or at least get some kind of handle on my exits. I will try to be more disciplined.
Kelly

I always get a little spooked on days like today when the futures are up (or down) a lot more than the actual indices. Right now the S&P is up .8% but the futures are up 1.3%.

Seems strange to me, but I have no idea what it means. Anyone have any actual insight into this phenomenon?

Brett-

Thanks for the reminder about exits. I've been ignoring my rules lately and it's gotten me in trouble with my trades.

liz

CVD looks to be flagging. Has had great relative strength in the last few weeks.

M

Hi all,
been away on vacation for about 2 weeks...trying to catch up on the blog (tough to do).
LVS, I played an inverse h & s on this (sweet). now I see a big ol Cup & Handle forming....
Thanks

Can I get another perspective on OXM? I shorted the stock to about 37 and I am thinking about doing it again. I am not sure how to read the bullish candle of Friday, I like to think it was short covering. I would like to hear what you guys (girls) think

anyone?

Interesting to note that the Russell has been heading down since an early high.

Tim, I have noticed the futures disconnect too and do not know either but when I see it strange things happen but is there a pattern?

I am in BPHX just a small position but glad I am in it. Thanks for that one as it met my rules and I jumped in. Only have two trades working right now so having this one take off even though not much money is a great validation for me.

Jeff, Love Kid Rock. He exemplifies rock and roll. Great music and has slept with Pamela Anerson.

Took down the Phoenix on Friday. Thanks for the heads up Brett.

I also am riding TMA out of business....


Rd

THE PHOENIX is rising and with fire in its belly will torch any bears standing in its way.

Could it be that GRMN is pulling back to create another entry????

:-)Pat

Jeff may not want to post a watchlist, but I will:

Bullish:

AEM - breakout.
BIDU - ascending triangle. volume drying up now as it should.
BPHX - haven't we said enough?
CME - if it retakes $590 today, it will be a solid level of support
CUB - breakout
DRYS - fighting to break out of its flag
ELN - flagging after 3 mean-looking white soldiers
FARO - huge breakout and retest
FLR - blasted through on big volume and retested successfully
GEO - holding new support after triangle breakout
NILE - bouncing after big breakout
OME - remember CALM? This one has big, big potential
PKX - bouncing...not for the faint of heart
SNDK - it's not too late

Bearish:

ACAS - down from horiz and diag resistance
ACI - down from horiz and diag resistance
ACLI - down from trendline resistance
BXP & MAC - as discussed friday, turning down
DRIV - desc tri setup
FLS - double top setting up, perfect volume
RCL - horiz and diag resistance. Who's taking crusies?
RTSX - probably too late now, but this morning was good entry
VLO - nice bear flag breakdown in progress

If any of these trades go badly, don't even think about contacting me about it!

Brett,
I need to do some refresher courses on candles, too.
What is the significance of three white soldiers?

M

M,

It doesn't REALLY apply here, since it's traditionally a reversal pattern. But it's still bullish in my book.

I like the way DECK is setting up to the downside.
Took the trade Friday at the open and am under water right now but am still positive about it. Solid close above 100 and I'm out of it though.

Rd

C2, great reading material. Brett, enjoy the rise of the Phoenix.

RTI, added it to your bearish watch list. A break of support at 70 could be beautiful.

Thanks for the watchlist, Brett. Awesome.

I will blame you if they go wrong but take credit myself if they go right.

The Rogue's watch list is as follows:

<---Begin watch list--->

Do the opposite of suckers.

In other words, don't suck.

<---End watch list--->

You doubt? Well, after all, The Rogue is profitable. Can you say the same?

Suckers.

The Rogue is forever.

Brett,
KRC, would that be considered a bear flag?

M

Well, I guess the Rogue with be buying calls on DECK....

We'll see who is right.

Rd

Brett, are you playing straight directional option trades on that watch list? Option prices are really high. Any volatility contraction and these are gonna get hit hard without a corresponding move in the stock. I've been contemplating bull call spreads on some of these.

MikeH

This comment has been removed by a blog administrator.

Remember,

Ignore the impotent rogue and he will go away.

Thanks, Brett, for taking the time to post a watch list.
Tonight it will give me some stocks to study. I learn the best this way. Printed it out for ease of reference.

M

Does GRMN look like a flag with support around 95/96ish??





M

Jeff (or anyone else that manages a blog on this site)-

As the manager of this site, do you have the capability of blocking certain people who post? Just a thought.

Kim

Yes, Kim, you can. There is no such thing as anonymous on the internet. If Jeff has a site meter you can easily access IP addresses and block them. You can also report people to Blogger and let them deal with the trouble.

It's very annoying, especially when people feel the need to use such foul language. It really shows their ignorance.

Laney

M -

Yeah, I guess you can call GRMN a flag. I see it more as a pull back to support (and about time, too! I've been WAITING!)
But it does have support at 95-ish.

:-) Pat

Brett,
Thanks for the list! Now I remember why I crossed MAC off - very low open interest plus huge spreads. I'm finding large spreads everywhere and I'm not finding anythingI want to trade today. I took a quick profit on my ATW bullish trade early today when it was still up nicely. Glad I did that. So now my positions are down to a couple of spreads, and some puts on GGP and IWM. Small positions. Looking for that compelling trade.

VV% change looking pretty low across my watchlists. Does not feel very bullish. Expecting to see this rally fade soon.

Long: cash, SHV

Short: Q's. Going with some QQQ-UV on the next good break

Dave_W

Clean Cups!! New Thread!!

Joel R.

Nice bearish entry on LEN...

Clean cups!

--Patti

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