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Current Stock Market Volatility and the Daily Options Trading Strategy (DOTS)

The last two days of trading have been very wild in terms of volatility, the ideal situation when using the Daily Options Trading Strategy (DOTS), which I developed in 2001. With market conditions like this, there will always be plenty of opportunities and higher sell-to-close (STC) prices. This strategy performed great during the stock market crash due to the mortgage/bank crisis in 2008-2009, with about 80% of the trades being call options.

Generally, I look for 10% gains per each DOTS trade. For example, if I pay $12.50 per contract, my sell-to-close price will be $1.25, or $13.75 st the price the trade is closed out at.

The strategy uses a five (5) technical indicator system: Bollinger Bands, the Relative Strength Index, the IntraDay Momentum Index, the Money Flow Index, and the Full Stochastic Oscillator.

Here are the trades placed and closed out the last two days (all of these trades were exited extremely fast:

875. Monday, 2/5/18. NVDA at 9:36 am EST. 0.80 STC order above price paid/contract. February 220.00 calls. Paid 14.30 per contract.
876. Monday, 2/5/18. NVDA at 1:21 pm EST. 0.75 STC order above price paid/contract. February 220.00 calls. Paid 13.25 per contract.
877. Tuesday, 2/6/18. BA at 9:55 am EST. 1.00 STC order above price paid/contract. February 340.00 puts. Paid 9.20 per contract.
878. Tuesday, 2/6/18. TSLA at 10:16 am EST. 1.50 STC order above price paid/contract. February 330.00 calls. paid 12.80 per contract.
879. Tuesday, 2/6/18. AAPL at 10:36 am EST. 0.75 STC order above price paid/contract. February 155.00 calls. Paid 4.70 per contract.
880. Tuesday, 2/6/18. TSLA at 1:49 pm EST. 0.60 STC order above price paid/contract (sold a bit too early, later in the trading day). February 330.00 calls. Paid 11.80 per contract.

I am expecting this market volatility to continue for a while, so looking forward plenty of more quick and successful trades ahead. If you are interested in my subscription service, all plans have a guaranteed one week money back guarantee if you are not happy with the subscription.

If you have any questions, you can e-mail me anytime at: kmob79@gmail.com.

Thanks.

Updated Daily Options Trading Strategy (DOTS) List of Stocks Used – Current as of 1/30/18

Here is the current list of stocks I am using for the Daily Options Trading Strategy (DOTS). This list is current as of 1/30/18, separated by three (3) Tiers. Here is the list:

Tier 1: AAPL, AMZN, BABA, BIDU, FB, GOOGL, NFLX, NVDA, TSLA

Tier 2: BA, CMG, EA, FFIV, IBM, LMT, FDX, SQ, ULTA

Tier 3: AKAM, CAT, C, DPZ, NUGT, RHT, SINA, TWTR, WDAY

These are some other stocks I monitor for daily trades, but that are not on my grid view: STZ, V, ADBE, TTWO, WYNN, ISRG, JPM, COST, HD, PCLN, CRM

If you have any questions, you can e-mail me at: kmob79@gmail.com

Thanks.

Very Busy Trading Day on Tuesday, 1/16/18

While the markets opened up very high to start out, eventually there was a significant drop later in the afternoon. I did get in a couple of successful early trades, there were so many opportunities later, I actually missed a couple of them as they were happening simultaneously. In situation like this, I look at which stock is more volatile, the width of the Bollinger Bands (from low to high, and vice versa) and the strike price bid/ask differential and strike price volume.

With the Daily Options Trading Strategy (DOTS), which I developed, my ideal sell-to-close price above what was paid per contract, is at least 10 % gain per trade. However, it is common to net at least 15 % + per trade, others 7% if the trade is taking a little bit longer than expected.

All of the trades posted below were exited extremely fast from the time of entry.

Here are the trades placed on Tuesday, January 16, 2018:

857. Tuesday, 1/16/18. BIDU at 9:40 am EST. 0.25 STC order above price paid/contract. January 265.00 puts. Paid 4.75 per contract (there was a wider bid/ask price than usual, so I sold early, original 0.60 STC.
858. Tuesday, 1/16/18. SQ at 9:56 am EST. 0.15 STC order above price paid/contract. January 40.00 calls. Paid 0.68 per contract.
859. Tuesday, 1/16/18. BABA at 10:21 am EST. 0.26 STC order above price paid/contract. January 190.00 calls. Paid 1.84 per contract.
860. Tuesday, 1/16/18. GOOGL at 1:04 pm EST. 1.00 STC order above price paid/contract. January 1130.00 calls. paid 8.20 per contract.
861. Tuesday, 1/16/18. BABA at 2:03 pm EST. 0.18 STC order above price paid/contract. January 185.00 calls. paid 1.40 per contract.
862. Tuesday, 1/16/18. NVDA at 2:18 pm EST. 0.25 STC order above price paid/contract. January 220.0 calls. paid 2.10 per contract.

This week is still somewhat slow in terms of earnings trades, with a lot of bank/financial earnings still due, but next week really picks up. Along with the DOTS strategy, earnings trades are a great source of generating income, and require much less stock/chart monitoring.

All subscription plans include access to my Skype chatroom, where I post my Daily Options Trading Strategy real-time trade alerts. All subscription plans also include full access to my Trading Forum, which is where I post all of my earnings, weekly, and long-term trades.

If you have any questions, you can e-mail me anytime at: kmob79@gmail.com

Thanks.

-Kevin

Double Neutral Calendar Spread Strategy Placed on Red Hat (RHT) Today, 12/19/17 – After The Markets Closed

Red Hat, Inc. (RHT) has always been a good stock to use the Double Neutral Calendar Spread strategy with. As I posted on my Trading Forum page, where I post all earnings trades I place, (RHT) reported earnings after the markets closed today:

Here is the Profit/Loss Chart for this (RHT) trade:

Currently, as of 5:54 pm EST, the stock is down about $5.20 a share:

One of the main things I stress when trading and teaching about earnings trades is to use a neutral-based approach. For example, Red Hat (RHT) actually had a very good quarter, beating on revenue and earnings. This does not always matter when trading earnings releases. There are many factors that may move a specific stock: future guidance is always one of the most important.

After-hours, on the same hand, is not always an accurate prediction as to how the stock will trade the when the markets open the following morning. However, if the stock should stay in the same range as it is now, this trade looks to be a very nice winner. I paid a net debit of $1.05.

I will post an update tomorrow as to how the trade worked out. This trade does expire this coming Friday, and will all earnings trades, I like to exit as soon as possible, but will also let the time-decay factor work in my favor if I see that a lot more value can be gained by doing so.

This strategy, and all of my earnings-based trades are posted on my Trading Forum webpage.

I am currently offering a great discount on all subscription plans until December 5, 2017.

If you have any questions about this strategy, or any others, you can e-mail me at: kmob79@gmail.com

Also, if you are interested in a free PDF copy of my book on Bollinger Bands, e-mail me and I will send you a copy.

Thanks.

Update 1: 12/20/17 at 9:45 am EST: Trade is looking excellent. Will update when the positions are closed out.

Update 2 9:55 am EST: The Call Side position closed at $0.35. Will update when the Put Side position is closed.


Update 3: 10:44 am EST. The Put Side of this trade is currently has a bid/ask price of $0.70 – $1.70, which will narrow out shortly. Trade is in a great position here, right near the put strikes. Time-decay will keep increasing value.


Update 4: 3:35 pm EST. I will be closing the Put Side position tomorrow to let the time-decay factor add even more value. The current Greeks/NBBO on (RHT) trade:

I will also provide a follow-up to this specific trade, why I chose the strikes I did, the expiration dates, and philosophy of the strategy itself. Soon, I will be writing a book on the Double Neutral Calendar Spread strategy that will go into my past trades over the years using it, when to take advantage of it, and why I feel it is one of the best earnings strategies there is. Follow up tomorrow when the position is closed.

Final Update: 12/22/17. The entire position has been closed out a net credit of $2.00.

Lululemon Athletica Inc. (LULU) Earnings Trade – The Double Neutral Calendar Spread Placed On 12/6/17 Explained

Lululemon Athletica Inc. (LULU) reported earnings after the markets closed on Wednesday. (LULU) is a great candidate to use the Double Neutral Calendar Spread strategy. To read more about this strategy, see this link here: http://kevinmobrien.com/?p=858

At the time of placement on Wednesday, (LULU) was trading at $66.50/share. Understanding past performance movement post-earnings on the stock, (LULU) tends to move in the $4.00 -$6.00 range, up or down after reporting earnings. When using this strategy, I like to go on the higher end of price movement. For example, at $66.50 a share, I was looking at the $72.50 strikes on the call side, and $61.50 on the put side. While there other closer near the money strikes available, using those presented too much risk for me, allowing less price movement in the share price to make a profit I was satisfied with.

Trade and Probability Calculator/P/L Chart

I got this trade filled at a $0.33 debit.

The following morning, (LULU) opened up at $73.35/share. This was a perfect scenario. Immediately at the open, the trade was very profitable. It could have been closed out then. However, an important factor with this strategy is that time-decay is on your side at this point. Depending on what kind of profit a trader is content with, a choice has to be made. I chose to keep the trade until this morning (Friday, 12/8/17). Understanding that the stock wasn’t going to make a drastic price move, time-decay taking place, I closed the position out at a $1.10 net credit on the call side, and also got $0.10 on the put side, which I sold on Thursday morning.

To compare strategies and costs, a Straddle strategy (buying both calls and puts that are at-the money), would have cost about $7.50. Using ten (10) contracts on each leg, this trade would have costs $7,500.00, minus commissions. A Strangle strategy would cost less, but there is also a lot more risk, as the stock has to move much more in order to profit.

Another benefit of the Double Neutral Calendar Spread strategy is how well it holds value. On a Straddle/Strangle, there must be a major price move in order to profit or you will be looking at a major loss. In my opinion, the Straddle is the most risky earnings strategy one can place. While the potential profit is unlimited on the upside (the calls), there is simply too much of a price move needed, often unrealistically.

When using this strategy, you want to see a profit/loss chart that looks like the one I posted above. If you see any points in the chart that look like this, avoid the trade completely:

You will always want to avoid non-volatile stocks that have a history of making minimal price moves post-earnings.

As I mentioned in my first post about this strategy, when used properly with the parameters I emphasize, this strategy is one of the most inexpensive, low risk, and profitable strategies there is when using for an earnings-based trade.

If you have any questions about this strategy, or stock options, please leave a comment or e-mail me at: kmob79@gmail.com

This strategy, and all earnings traded are posted on my Trading Forum website, and each subscription has access to these trades (you receive them instantly via e-mail once posted). I am currently offering a subscription match plan until this Sunday, 12/10/17.

Thanks again.

Updated List of Stocks Used For The Daily Options Trading Strategy (DOTS) – Current as of 11/28/17

Here is the updated list of stocks used in the Daily Options Trading Strategy, current as of 11/28/17:

Tier 1: AAPL, AMZN, BIDU, BABA, GOOGL, FB, NFLX, NVDA, TSLA

Tier 2: BA, TWTR, SHOP, SQ, CMG, CRM, ULTA, FFIV, AKAM

Tier 3: RHT, PYPL, FDX, NUGT, EXPE, FSLR, CAT, C, IBM

I also have discounted subscription rates until this Friday, 12/1/17.

If you have any questions, you can e-mail me anytime at kmob79@gmail.com

Updated Daily Options Trading Strategy (DOTS) List of Stocks Used – Current as of 10/13/17

Here is the updated list of stocks used in the Daily Options Trading Strategy, current as of 10/13/17:

Tier 1: AAPL, AMZN, BIDU, BABA, GOOGL, FB, NFLX, NVDA, TSLA

Tier 2: BA, TWTR, C, SQ, CMG, CRM, ULTA, FFIV, AKAM

Tier 3: RHT, PYPL, FDX, NUGT, EXPE, FSLR, LMT, ISRG, IBM

If you have any questions, you can e-mail me at: kmob79@gmail.com

Thanks.

Earnings Trade of the Week: Tesla, Inc. (TSLA) – Reports After the Markets Close On Wednesday, 2/22/17

Tesla, Inc. (TSLA) is scheduled to report earnings after the markets close on Wednesday, 2/22/17.

Last quarter, the stock had the following price movement after reporting earnings:

Oct 27, 2016

211.34
213.70
201.65
204.01
204.01
13,093,700

Oct 26, 2016

201.00
203.19
200.10
202.24
202.24
5,632,800

Last quarter, (TSLA) had one of the least moving quarters after reporting earnings in some time. I think this is why this trade strategy here, a Reverse Iron Condor, sets up really well. If (TSLA) reported earlier this week, I would have been more comfortable using the weekly options that expire this Friday. But since tomorrow will already be Thursday, we want to be a little more conservative when choosing to use a weekly with just two days left. Instead, I will use next week’s expiration, which expires next Friday. I like this trade a lot, as I think (TSLA) will make a much larger price move than last quarter, and the break-even points are much smaller than I anticipated. (TSLA) is a very volatile stock in the first place, so this trade should have no problem gaining maximum value. 9.5/10. I am going a bit heavier on this specific earnings trade than usual.

Here is how the trade is placed:

Entered Trade

Buy 20 TSLA MarWk1 255 Put

Sell -20 TSLA MarWk1 250 Put

Buy 20 TSLA MarWk1 290 Call

Sell -20 TSLA MarWk1 295 Call

Requirements

Cost/Proceeds
$4,200.00
Option Requirement
$0.00
Total Requirements
$4,200.00
Estimated Commission
$100.00

NBBO
1.80 2.39. Try to pay 2.10 or less for this trade. At a maximum, pay up to 2.15. See the attachment for the profit/loss chart.

Update 1: 9:22 am EST: Pre-market, (TSLA) is down about $6.00/share. Once volume kicks in, it could go any direction. Since there is over a week of time value left, I am initially going to place the price to close out (net credit) on both the call and put sides of this trade at $4.00 for now. I will be continuously updating this trade throughout the day.

Update 2: 9:44 am EST: On the put side of this trade, place the price to close the position out (net credit) at $4.20. Leave the call side open for now, there is plenty of time left on it, and the Reverse Iron Condor strategy, with two “sides”, the bull call spread and the bear put spread, can do very well by holding one side.

Update 3 12:45 pm EST: No Changes to positions. Will update as needed.

Update 4: 3:40 pm EST. I will update this trade right before the markets open tomorrow morning. In a good spot, should do well on it.

Update 5: 9:15 am EST. 2/24/17: TSLA is down another $4.00 pre-market, so after yesterday’s drop this trade should start really gaining in value. One of the reasons I chose next week’s expiration instead of the February Week 4 (this week) is exactly for how this trade is working out. If I chose this weeks, it is a borderline loss/break-even unless the stock really drops a lot more today. It would have been much more risky move to do. I have the price to close the put side of this trade out at 4.30. The call side obviously has little value, as this is how the strategy is designed, so leave it open. It would cost more to close the position than the value. I will update any changes, as needed, here.

Update 6: 9:40 am EST, 2/27/17: TSLA down big again. 4.30 STC (net credit) on the put side of this trade.

Free Earnings Trade of the Week: GoPro, Inc. (GPRO) – Reports After the Markets Close On 11/3/16

GoPro, Inc. (GPRO) is scheduled to report earnings after the markets close on Thursday, 11/3/16.

Last quarter, the stock had the following price movement after reporting earnings:

Jul 28, 2016

12.15
13.28
11.75
13.02
24,145,000
13.02

Jul 27, 2016

11.47
11.83
11.42
11.57
10,651,700
11.57

The Implied Volatility on the weekly at-the-money strike price is an extremely high 401. This is very rare. Compared this number to the November 2016 at-the-money strike price of 113, which is still high, but there’s still a huge discrepancy here. If the stock make a similar move as to what it did last quarter, the trade and strategy I am using here, the Neutral Calendar Spread, will be very profitable immediately. The price is excellent to place this trade, as well, with weekly options available. 9/10.

Here is how to place this trade:

Entered Trade

Sell -75 GPRO NovWk1 12 Call

Buy 75 GPRO Nov16 12 Call

Requirements

Cost/Proceeds
$750.00
Option Requirement
$0.00
Total Requirements
$750.00
Estimated Commission
$187.50

NBBO
gpro-ncs-11316 0.06 – 0.13. Try to pay 0.10 or less for this trade. At a maximum, pay up to 0.11. See the attachment for the profit/loss chart. I will post the price to close this position out tomorrow morning right before the opening bell.

Update 1: 9:22 am EST, 11/4/16 – Pre-market, the stock is down about $2.00/share. This is close to what I expected, so I am anticipating the stock to recover off this low. I am placing the STC (net credit) at 0.30 for now, and will update any changes to this here.

Update 2, 10:07 am EST – price to close this trade out (net credit) now at 0.25.

Update 3: 10:42 am EST. Position closed at 0.27. Paid 0.12.

Excellent Week Trading Earnings & The Daily Options Trading Strategy (DOTS)

Is has been a great week so far both with the start of Earnings Season and the Daily Options Trading Strategy (DOTS). Here is the list of DOTS trades so far this week (10/17/16 – 10/20/16):

630. Monday, 10/17/16. AMZN at 9:41 am EST. 1.50 STC order above price paid/contract. November 815.00 calls. Group chat paid an average of 32.85 per contract.
631. Monday, 10/17/16. ULTA at 9:47 am EST. 0.60 STC order above price paid/contract. November 260.00 calls. Paid 7.60 per contract.
632. Tuesday, 10/18/16. TSLA at 1:14 pm EST. 0.70 STC order above price paid/contract. November 195.00 calls. Paid 10.30 per contract. Quick trade.
633. Tuesday, 10/18/16. TSLA at 1:20 pm EST. 2.20 STC order above price paid/contract. November 195.00 calls Paid 9.60 per contract. Used a Trailing Stop.
634. Wednesday, 10/19/16. NUGT at 10:18 am EST. 0.25 STC order above price paid/contract. November 13.00 calls. Paid 2.45 per contract.
635. Wednesday, 10/19/16. ULTA at 10:01 am EST. 0.44 STC order above price paid/contract. November 255.00 calls. Paid 6.16 per contract.
636. Thursday, 10/20/16. BIDU at 9:39 am EST. 0.55 STC order above price paid/contract. November 175.00 calls, Paid 7.75 per contract.
637. Thursday, 10/20/16. TSLA at 9:41 am EST. 0.90 STC order above price paid/contract. November 200.00 calls. Paid 8.75 per contract.
638. Thursday, 10/20/16. AAPL at 10:40 am EST. 0.30 STC order above price paid/contract. November 115.00 calls. Paid 3.90 per contract.

You can see the Daily Trade Log at the top of the page.

As far as earnings, every trade so far this week has been a winner (already closed out). I also placed 3 new Earnings trades today.

earnings-kob-oct-week-3

Next week is stacked with earnings, one of the biggest weeks really in the next few months. During slow periods today, I was preparing for a busy week next week.

I have reduced the subscription rates during the busy period during earnings season (until October 31st).

If you have any questions, please e-mail me anytime at: kmob79@gmail.com

Thanks again.

-Kevin

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