Author: The INO.com Team

How To Achieve A 98% Options Win Rate

Posted on by The INO.com Team

Achieving an options win rate of 98% requires following a core set of 10 basic rules supplemented by some general guidance. Following these rules while deploying an array of option types (i.e., put spreads, call spreads, iron condors, and diagonal call/put spreads) across a diverse large-cap ticker list is the foundation of this success. Staggering expiration dates, managing winning trades, keeping trade allocation in balance with overall portfolio size, and trading in tickers that are liquid in the options market are other critical components to this success. Sticking to high probability outcomes via leveraging delta as a proxy, layering in some basic technical analysis, and maintaining appropriate portfolio structure is essential while ideally maintaining a 50% cash in addition to a hybrid long equity/options approach.

Options Trading Framework - 10 Essential Rules

A set of trading fundamentals must be followed to run an options-based portfolio over the long-term successfully. Specifically, position-sizing, sector diversity, maximizing the number of trade occurrences, and risk-defined strategies are some notable areas that traders need to heed for long-term successful options trading.

The following option trading fundamentals must be exercised in every trade. Violating any of these fundamental rules will jeopardize this strategy and possibly negate this approach's effectiveness on the whole. Below are 10 option trading rules that provide a basic framework of options trading to maintain discipline and systematic trading mechanics (Figure 1). Continue reading "How To Achieve A 98% Options Win Rate" →

Another Record Close For DOW And S&P 500

Posted on by The INO.com Team

The DOW climbed 293.05 points or +0.9%, a record close at 32,778.64. The S&P 500 erased earlier losses and inched up +0.1%, eking out a record close of 3,943.34, and the NASDAQ shed +0.6% as rates surged once again, putting pressure on the tech sector. Alphabet and Facebook dropped 2% each, while Apple, Amazon, and Microsoft closed in the red.

On a weekly level, the DOW and S&P 500 both triggered new green weekly Trade Triangles this week on their way to another record close. The DOW gained +4.07% on the week, with the S&P followed with a gain of +2.6%. The NASDAQ was able to bounce back after three straight weeks of losses with a weekly gain of +3.09%, but it wasn't enough to trigger a new green weekly Trade Triangles; thus, the Chart analysis score remains +55, in a sidelines position. Continue reading "Another Record Close For DOW And S&P 500" →

Options: Outperformance Despite Choppy Markets

Posted on by The INO.com Team

An agile options-based approach is essential to navigating these choppy markets that we have witnessed thus far in 2021. Generating consistent monthly income while defining risk, leveraging a minimal amount of capital, and maximizing return on capital is the core of options trading. Options enable smooth and consistent portfolio appreciation without guessing which way the market will move. Options allow one to generate consistent monthly income in a high probability manner in all market scenarios. Over the past 10-plus months (May 2020 – March 2021), 225 trades were placed and closed. A win rate of 98% was achieved with an average ROI per winning trade of 7.5% and an overall option premium capture of 84% while outperforming the S&P 500. The performance of an options-based portfolio demonstrates the durability and resiliency of options trading to drive portfolio results with substantially less risk. This approach circumvented the September 2020, October 2020, and January 2021 sell-offs while outperforming the S&P 500, posting returns of 50.6% and 47.5%, respectively (Figures 1, 2, and 3).

Options
Figure 1 – Overall options-based performance compared to the S&P 500 from May 2020 – February 2021 Continue reading "Options: Outperformance Despite Choppy Markets" →

DOW Rallies 570 Points In Big Turnaround

Posted on by The INO.com Team

The DOW climbed 572.16 points or +1.9%, to 31,496.30 after losing as much as 150 points in earlier trading. The S&P 500 ended the wild trading session +2% at 3,841.94 after shedding -1% earlier and the NASDAQ advanced +1.6% to 12,920.15 after dropping -2.6% early in the trading session.

On a weekly level, the NASDAQ fell more than -2% this week and briefly turned negative on the year. The S&P 500 gained +0.8% this week, snapping a two-week losing streak. The DOW outperformed with a +1.8% weekly gain. Both the DOW and S&P 500 joined the NASDAQ mid-week by triggering new red weekly Trade Triangles indicating that overall, the market could be in a sidelines mode.

The indexes bounced off their lows as bond yields retreated from their session highs. The 10-year Treasury yield eased back to 1.55% after popping above 1.6% to touch a 2021 high following data showing a surge in jobs growth. Continue reading "DOW Rallies 570 Points In Big Turnaround" →

Week To Forget But A Month To Remember

Posted on by The INO.com Team

Sure, this week has been rough for traders and the markets overall, but it was a great month. Weeks like this are reminders to separate yourself from the recent daily volatility and look at the long-term trend. How do you do this? I'll show you in today's video.

As for the overall markets, let's get into it. Friday was as volatile as they come, with the Dow dropping -1.5% or -475 pts. The S&P 500 had lost -2.5% but pushed back strong into the close but fell just short of finishing in the green with a loss of -.48% or -18.49 pts, and while the NASDAQ shed -3.5% early in the day, it also bounced back to post a daily gain of +.56% or +72.91.

The S&P 500 is down -2.45% for the week, on pace for its second negative week in a row. The DOW has fallen -1.8%, and the NASDAQ way underperformed this week with its worst week since October, losing -4.9% on the week.

Now, this is where looking at the long-term trends can give you some sanity. Continue reading "Week To Forget But A Month To Remember" →