98% Options Win Rate Despite September Correction

Posted on by The INO.com Team

Options trading, at its core, is defining risk, leveraging a minimal amount of capital, and maximizing return on investment. Options trading in combination with broad-based index funds and cash-on-hand provides portfolio agility in the face of market corrections and volatility expansion. Although options trading provides a margin of downside protection and a statistical edge, no portfolio is completely immune from sharp double-digit declines when a correction occurs. A liquidity position provides portfolio agility to contend with and rapidly adjust when faced with extreme market conditions such as the September market correction.

An agile options based portfolio is essential to navigate pockets of volatility. The recent September correction was a prime example of why maintaining liquidity is one of the many keys to an effective long term options strategy. Over the past six months (May, June, July, August, September, and thus far in October), 127 trades were placed and closed. An options win rate of 98% was achieved with an average ROI per trade of 7.4% and an overall option premium capture of 91% while outperforming the broader market despite the September downturn. Along with these metrics, three losses were suffered in September. Analyzing these three losses via self-reflecting and learning will enable traders to make positive future adjustments to their trading strategy.

Despite September Sell-Off – Positive Returns

Since March, the September sell-off was the worst technology rout, while the Dow and S&P 500 posted four-week losing streaks, their longest losing stretches since August 2019. The Nasdaq had its first weekly gain in four weeks at the tail end of September. All the major indices sold off double-digits and into correction territory throughout September. This recent September correction provides a great opportunity to demonstrate the durability and resiliency of an options-based portfolio. Continue reading "98% Options Win Rate Despite September Correction" →

Precious Metals: Bullish Only

Posted on by Aibek Burabayev

The king currency and the precious metals move amazingly in line with the previous forecasts. As time goes by, we can see the path clearer these days, and therefore I kept only the one option for each instrument to emerge.

Let us start this post with the updated daily chart of the U.S. dollar index (DXY), aka "King," as it keeps a strong influence on the precious metals.

precious metals

The selling pressure remains relatively strong in the dollar index. The expected pullback transformed into a minor sideways consolidation. It was not deep, as it could not retest the resistance. The price already broke below the consolidation valley in 93.3, and the RSI indicator confirmed that move down sinking below the crucial 50 level. This was one reason to think that we should now expect only the bullish option in the precious metals. Continue reading "Precious Metals: Bullish Only" →

Gold And Silver Futures Mirror Each Other

Posted on by Mike Seery

Gold Futures

Gold futures in the December contract settled last Friday in New York at 1,907 an ounce while currently trading at 1,930, ending the week on a positive note as prices have now hit a 3 week high.

If you look at the daily chart, gold, and silver mirror each other, it looks to me that this commodity bottomed out around the 1,850 level. I will be looking at a possible bullish position once prices hit a 4 week high, and the chart structure improves; therefore, the risk/reward would be more in your favor.

If you want to jump the gun and are bullish at this point, I would place the stop loss under the 1,850 level as the risk would be around $8,000 per contract plus slippage and commission. However, I will be patient and wait for that risk to be lowered significantly. The U.S. dollar was down by 50 points continuing its bearish momentum as the board's commodity markets look very strong. I think they will continue their bullish momentum in next week's trade as I am also keeping a very close eye on a possible bullish silver position as I do not think the 2,100 level will be the top in gold.

TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: HIGH

Silver Futures

Silver futures in the December contract settled last Friday in New York at 24.02 an ounce while currently trading at 25.08, ending the week sharply higher as prices have now hit a 3 week high.

I'm sitting on the sidelines looking at entering into a bullish position once prices hit the 4 week high. This market has been incredibly choppy over the last several weeks looking to bottom out, in my opinion. If you have been following my previous blogs, you understand that I am bullish on the commodity markets. I will not take a short silver position as I do not think the $30 level will be the high. We are just consolidating that run-up in price that we witnessed over the last couple of months. Continue reading "Gold And Silver Futures Mirror Each Other" →

New Green Weekly Trade Triangles

Posted on by The INO.com Team

With the positive week, both the DOW and S&P 500 joined the NASDAQ with new green weekly Trade Triangles indicating that a long position is in order for the market. With the new green weekly Trade Triangles, all three indexes now have Chart Analysis Scores of +100, with green Trade Triangles across the board.

The DOW jumped +3.2% for the week and posted its biggest one-week gain since August erasing the steep September losses that the market endured. The S&P 500 and NASDAQ were up +3.8% and +4.5%, respectively. Both indexes had their biggest one-week gain since early July of this year. Continue reading "New Green Weekly Trade Triangles" →

Housing Is A Booming Industry During The Pandemic

Posted on by Matt Thalman

When the pandemic hit home and the Federal and State governments ‘shut down’ the country and U.S. economy in March, some industries were predictably going to perform well. The ‘stay at home’ stocks and technology companies or the online and big-box retailers that had web presence where obvious smart plays during a time when social distancing and avoidance of large public places was going to be for the foreseeable future. However, due to government policies, primarily low-interest rates, the housing industry has also become a powerful economy sector.

In August, existing-home sales were up 10.5% year-over-year at a seasonally adjusted annual rate of 6 million units. In August, new home sales hit 1 million units, which represents a 43.2% increase compared to August of 2019. If current sales rates continue as they have been, unsold inventory is just three months of supply, which ties December of 2019 for the lowest level we have seen in the last 20 years.

In hindsight, it makes perfect sense, but during the stock market crash in March and the fact that for the most part, the vast majority of American’s were stuck at home, it was hard to predict that the housing industry would boom in the middle of a pandemic. However, that is exactly what has happened, and as I mentioned, looking back now, it is obvious why housing would boom at a time like this. People are stuck at home and realize how much they don’t like their home, or they were living in densely populated cities and want to move to the suburbs and have more space.

With the unknown of how much longer Covid-19 and the pandemic will disrupt life as we knew it, there are a few housing-related Exchange Traded Funds that you may want to consider owning as a way to catch a piece of the housing boom, without investing directly into real-estate yourself. Continue reading "Housing Is A Booming Industry During The Pandemic" →