Ok, so technically Microstrategy $MSTR is not a bitcoin ETF.

But for those of you paying attention to this space, you know that the CEO Michael Saylor has gotten very long and very loud about his company investing significant portions of its operating capital in Bitcoin. And because of this, the share price of $MSTR stock has since become highly correlated to the price action of Bitcoin.

We were chatting about it this morning and the one thing the team all agreed on is 10 years from now, Saylor is either going to go down as the Greatest Fool in History, or, The Greatest Investing Genius in History. There’s really no other outcomes here for him. And you know what? I say cheers to you, Michael Saylor! Way to put your cohones on the line for something you so passionately believe in. Your investors will either one day elevate you to Sainthood or sue you into oblivion. Godspeed.

We’ve got our popcorn ready and we’ll be watching!

Anyway, all of the above makes for fun coffee table conversation. But we traders only care about the price action and how we can profit from it. So let’s get right to it. [Read more…]

Feels good to be back from vacation! And I’m glad to see the stock market fared nicely while I was gone.

Looking around, we’re seeing lots of fresh setups. But with earnings calls on deck, I’ll have to be patient with many of my favorite ideas to let the event pass so as not to caught offsides by a sudden move in the wrong direction.

However, one of my favorite setups just got its latest earnings release out of the way this morning and thankfully it basically amounted to a non-event. Its recent breakaway gap continues to hold above its prior 3-year resistance level. And with the binary earnings event out of the way, options premiums have been evaporating throughout the day. This sets us up for taking a longer-term position at advantageous prices. [Read more…]

(While on vacation until Oct 26th, I’m going to be sharing some anecdotes on my favorite trading strategies: why I use them, when, and how I manage them once they are on.)

A Vertical Spread is one where you are long options at one strike and short an equal amount of options at another strike, both in the same expiration series. These can be done both for debits or credits, depending on whether you purchased the more expensive option (debit) or sold short the more expensive option (credit). And these can be done with either all calls or all puts.

But my favorite version of the vertical spread is a Bull Call Spread, where I purchase an at- or slightly out-the-money call and sell a further out-of-the-money call against it to lower my net purchase price. [Read more…]

(While on vacation until Oct 26th, I’m going to be sharing some anecdotes on my favorite trading strategies: why I use them, when, and how I manage them once they are on.)

Ok, so perhaps there’s some recency bias here as the most recent bullish Risk Reversals I’ve put on have worked. Really though, all that has done is remind me that I should probably do more of these trades.

In a nutshell, a bullish Risk Reversal is a trade where we short naked puts and use those proceeds to pay for long calls. That’s right, the market pays me to get long!

The trade is put on for a small net credit (ideally), and the short term goal is to ride an increase in the value of the calls which will allow us to sell a portion of them and use those proceeds to buy-to-close all the naked short puts. This then leaves us long the remaining portion of our calls for free! The calls could eventually reverse on us and go to zero, but we’ll still keep the credit we received when we originally put the trade on (plus whatever credit we may have gained when we sold some calls to close all the puts). This is a great situation to be in! [Read more…]

(While on vacation until Oct 26th, I’m going to be sharing some anecdotes on my favorite trading strategies: why I use them, when, and how I manage them once they are on.)

The majority of trades we do here with All Star Options tend to be directional in nature. And why not? We’re leveraging best-in-class technical analysis to give us an uncommon edge to participate in emerging and/or continuing trends. And if we know anything as Traders, we know that if we have an edge, we should attempt to execute against that edge as often as possible.

Meanwhile, I recognize there is an entire cottage industry around “selling options premium” and for good reason — it works! That doesn’t mean it always works nor does it mean it’s easy. I just don’t like to make it my only thing.

That said, one of my favorite strategies is to sell premium via Short Strangles. [Read more…]

(While on vacation until Oct 26th, I’m going to be sharing you some anecdotes on my favorite trading strategies: why I use them, when, and how I manage them once they are on.)

Here’s the thing about options trading: you can make it as complicated as your heart’s content. And there are plenty of incredibly smart practitioners out there who run amazingly complex strategies involving all kinds of volatility and statistical arbitrage.

They analyze 3D volatility surface graphs, use lesser understood greeks, and interpret things like “volatility smile” and dispersion.

If that works for you, great! I always say: if it works, do more of it!

But another beautiful thing about options trading is that there are many different ways to pull profits out of the market, and most of them aren’t as complicated as they may sound — even if the strategies have exotic sounding names like “iron condor” or “broken-wing butterfly.”

And my absolute favorite options strategy isn’t even really a strategy at all — it’s simply buying long calls when I’m bullish! [Read more…]