This post is the first in a series that we will be publishing over the next month , tracking the hypothetical performance of broken wing butterfly trades selected by Greg Loehr of Optionsbuzz.com. With the end of the quarter fast approaching there are two thoughts in my mind: quarterly window-dressing and a potential slowdown in China. For the next week, … Read More
I was on the phone over the last couple of days with two of our active Options Tribe members–Nagaraj Ramakrishna, who has developed an outstanding butterfly trade in the $RUT index and Charlie Ferguson–a remarkable weekly credit spread trader. They are each active members of our Options Tribe community, having both presented their trades recently on tribe meetings over the … Read More
In Friday’s options post, we talked about the tendency of options traders to become enamored of a particular strategy simply because the trader is on a brief winning streak with that specific strategy. This propensity is particularly dangerous because market neutral income options strategies typically are entered monthly. So even a mere four month winning streak—only four successful trades in a row–allows … Read More
In a speech delivered to the American Enterprise Institute in late 1996—in the middle of the formation of the dotcom bubble of the 1990s—then Federal Reserve Board Chairman Alan Greenspan coined the term “irrational exuberance” to describe an illogical optimism about the economy that was pumping up stock prices well beyond any reasonable level. History shows that he was correct, … Read More
This blog entry is the introduction to a series of posts about common mistakes made by options traders and how to avoid them.