Crowder's Stock Option Strategies
  June 12, 2011
High-Probability, Mean-Reversion Strategy
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No trade this week - the risk/reward was just too high. 

Several short-term extremes hit the market, but a few of the proprietary indicators I follow did not confirm, so a trade was not established. 

Patience once again prevailed because if a trade had been established it would have certainly been a losing endeavor as the market trended lower throughout the week.

As I always state, I would rather sit patiently on the sidelines for a better set-up to come my way. This is how to successfully play the options market or any market for that matter. Any trader with staying power will quickly tell you that patience is imperative when trading, particularly when trading options.

My true focus and the focus of my options strategy is to find extremes in the market. Lately the major benchmarks and the sectors I follow just want to sit in a neutral state. That is fine, extremes will hit the market as they always do and I will be waiting patiently to jump on those opportunities when the arise.

Remember, patience is the key for long-term success in options trading. I can't emphasize this enough.

The High-Probability, Mean-Reversion strategy is now up 40.2% since it was initiated seven months ago with a win ratio of 93.3%. The strategy advanced 7.2% for the month May.

Obviously I am pleased with the win ratio (93.3%) since I initiated the High-Probability, Mean-Reversion strategy, but I am a realist. I realize there is no holy grail in trading.

(From last week's issue) 

One thing that I do know for certain is that I have a unique, concrete, and most important, a profitable options trading strategy that makes the world of sense to me and I trade it to make money over the long-term.

Furthermore, I realize that the less I trade, the better my strategy will perform over the long run: and the long run is what matters. Hopefully, I can continue my winning ways and extend the gains going forward. Remember, this is a marathon and not a sprint.

The key to my strategy is patience. Waiting for the appropriate scenario to recommend a trade with a high probability of success is what makes my strategy a success.

Opportunities are made up easier than losses. If you let a few pass you by don't dwell on what could have been. There will always be more opportunities around the corner. Again, this a marathon not a sprint.

Check out the results here: High-Probability, Mean-Reversion strategy

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High-Probability, Mean-Reversion Indicator

(as of close June 10, 2011)

 

The major market indices have moved lower for the last six weeks. It is the first time in nine years that the S&P 500 has moved lower for six straight weeks.

 

As for the current short-term state of the the market as a whole all of the major indices have pushed into a short-term oversold state with the tech-heavy, high-beta Nasdaq 100 (QQQ) entering a "very oversold" state. 

 

If the Nasdaq 100 continues the push lower Monday a trade could occur. Subscribers stay tuned!

 

High-Probability, Mean-Reversion Indicator  

 

  

The New HPMR Credit Spread Options Strategy

 

The VIX has pushed ever closer to 20, which means my first credit spread trade could be right around the corner. I will use one or two of the underlying ETFs that I follow in the High-Probability, Mean-Reversion Indicator.

 

Preferably, due to liquidity reasons (tighter bid/ask spread) I will most likely utilize one of the major market benchmark ETFs (DIA, IWM, QQQ, SPY). My goal is to make roughly 5-10% per month, however, I there will be occassion where I will have the ability to make more particularly if the implied volatility continues to move higher in the ETFs I follow.

 

As I stated last week, I will spend a few months going over the strategy on the blog section of the CrowderOptions website. So, stay tuned and please take advantage of the comments section for any questions or concerns that you might have about the strategy.

 

Remember, I offer a 30-day Free trial so take advantage of it by following the strategy to see if it is something that you feel comfortable using in your current portfolio. There are lots and lots of options strategies out there. You just have to find several that suit your taste and just like an investment portfolio diversification is key. Don't limit yourself to one options strategy - diversify.   

 

Again, I hope to bring you valuable trading information on a weekly basis, oftentimes more, in my Free newsletter. As always, please do not hesitate to email me with any comments, suggestions or additional items that you would find helpful.

 

Kindest,

 


Andy Crowder
CrowderOptions.com

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