The majority of monthly trends are either up or sideways and the Yield Curve is still well above the bearish inversion point which would signal a recession and subsequent bear market.
For that reason, we still have a long-term bullish bias.
With the majority of weekly and daily trends being down, our bias is bearish.
However, the relatively close location to Major Support on the daily chart and the most recent decline, a counter trend reversal should not be far off.
We cannot emphasize enough the importance of proper money management when investing and trading the markets.
Corrections like the recent one can eliminate even experienced investors and traders if they do not follow money management guidelines.
“Experienced” by definition suggests that the money management plan is already in place. However, extreme moves in volatility and human nature being what it is, not hitting that stop-loss can result in tremendous losses.
Below is a daily chart of United States Natural Gas (UNG).
Trade: Under $35.92, consider shorting Nov (11/30) $40/46 bear call credit spread (5 DTE) for mid-point but a limit of $.85/share (closed at $.93/share). NOTE: Very high risk trade because spreads are illiquid and natural gas commodity has been extremely volatile. This is an Income Trade with 99% Implied Volatility Rank (IVR). However, we sell options/spreads around compelling charts and this generates an impressive 16.5% ROC if expires worthless below $40 short strike in five days.
Technical Setup: Bearish lower high retest and Topping Tails (TT) of Climactic Sell Setup daily, climactic weekly and TTs.
Option Strategy: Bear Call Credit Spread (BCCS).
Stop Loss: $40.02.
Below is a daily chart of SPDR S&P 500 ETF (SPY).
Trade: Under $263.00, consider shorting Nov (11/30) $267/272 bear call credit spread (2 DTE) for mid-point but a limit of $.50/share (closed at $.59/share). NOTE: We will also be on the lookout for shorting Nov (11/26) naked calls (0 DTE), will advise via Telegram as always with new trades and adjustments.
Technical Setup: Continuation Breakdown after bear gap and weak retracement daily, bearish weekly.
Option Strategy: Bear Call Credit Spread (BCCS).
Stop Loss: $267.16.
The recent huge move in Natural Gas and Crude Oil left the hedge fund optionsellers.com wiped out.
Check out this VIDEO on optionsellers.com blowing up last week and the lessons learned for option sellers like us — plus discussion of UNG trade idea.
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Not only was the fund 100% wiped out, because of the lack of money management and leverage, clients even owe money to the clearing firm.
James Cordier’s apology video commented on is located at: https://nypost.com/2018/11/20/tearful-hedgie-apologizes-on-video-for-losing-clients-money/?utm_source=NYPFacebook&utm_medium=Native&utm_campaign=NYPFacebook&fbclid=IwAR01XC64SEZEpR4BNzBJ9FYm8fWTR7K7sNDiBKu4sGI_YIIndhQEQpHWvbM
You are in control of your investments and trades and if you do not have a money management plan, you are being foolish at best.
Learning a method to invest and trade is the beginning of becoming successful in the markets. As with any profession, the experience comes after education.
Most do not succeed because they do not last — and that is the direct result of no education or not starting slowly to gain the required experience.
We will always do your best to help you. Ultimately, you are in control.
Below is a daily chart of Analog Devices, Inc. (ADI).
If the spreads were tighter, over Friday’s high would be a good candidate for a Bull Put Credit Spread (BPCS).
Below is a daily chart of Tilray, Inc. (TLRY).
If the spreads were tighter, over Friday’s high would be a good candidate for a Bull Put Credit Spread (BPCS).
Below is a daily chart of Tesla, Inc. (TSLA).
Breakout Failure and Major Resistance, we will be watching to sell Bear Call Credit Spread (BCCS).
VIDEO ON OPEN TRADES AND ADJUSTMENTS
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Please read the information on Money Management below
Learn how Master Trader Technical Strategies – MTS and MTS with Options Strategies can make consistent money.
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Learn how we scan pre-market compelling Gap Trades and discuss a “plan of attack” to profit.
Because your success is vital to you – and us.
Before selling options or credit spreads, we urge you to review the valuable and detailed information that we have provided for you in your Member’s Area.
You will find it by scrolling to the bottom of the page to Master Trader Subscriber Resources.
The link is Money Management Considerations When Selling Option Credit Spreads for Income.
It explains Master Trader Money Management, Trade Management, understanding the use of Contingent Orders, and much more.
If You’re in a Rush to Start
A quick simplified approach to calculating contract size is to simply base your contract size based on the number of shares permitted in your Trading Plan as if you were trading the stock or ETF.
Simple Share Sizing = $ Risk / Stop Loss
The amount of money that you are willing to risk – divided by – the stop loss amount. For example, $100 / .20 = 500 shares.
Credit Spread example, if your Trading Plan allowed you to trade 543 shares of AAPL based on the stop loss, then simply round down to the nearest hundred and short an equivalent number of contracts of the option.
Since 1 contract represents 100 shares of the underlying, this would be five (5) contracts.
Master Trader and You Building Your Financial Future Together!
Happy trading! If you have any questions or comments, please e-mail Greg Capra at Greg@mastertrader.com or Dan Gibby at Dan@mastertrader.com
All the best,
Greg Capra
Managing Director of Master Trader
Trading the Pristine Method — Origin and End
Dan Gibby
Chief Options Strategist
Follow Greg on Twitter, YouTube, and StockTwits
Twitter: @GregCapra
Stocktwits: Greg_Capra
NOTE: Master Trader will show opening and closing prices of all stock and options trades. We recommend that all traders and investors use proper share sizing for positions and money management. However, we cannot recommend what that is for your particular trading style, risk tolerance, or account balance.
We urge you to calculate your own share/position size based on your individualized risk parameters, Trading Plan, and familiarity with the proposed trade strategy and risk. Advanced Management Strategies (AMS) covers in detail foundational and advanced position and money management.
NOTE: Master Trader and its representatives may have existing positions in actual or other trade recommendations before or after suggested herein. Additionally, we may manage them differently for internal purposes based on different risk parameters than noted herein.
All trade ideas and content are for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, option or investment strategy is suitable for any person. Trading securities can involve high risk and the loss of any funds. Investment or trading information provided may not be appropriate for all investors, and is provided without respect to individual financial sophistication, financial situation, investing time horizon or risk tolerance. Supporting documentation for any claims (including claims made on behalf of options programs), comparison, statistics, or other technical data, if applicable, will be supplied upon request. Master Trader Consulting, Inc. is not a licensed financial advisor, registered investment advisor, or a registered broker-dealer. Options, futures and futures options are not suitable for all investors. Prior to trading securities products, please read the Characteristics and Risks of Standardize Options and the Risk Disclosure for Futures and Options found here: CLICK HERE.
