Submitted by Options Trading Signals
Learn How Out-of-the-Money Butterflies Create Profits Trading SPX
Over the past few weeks the broad stock market has seemingly grown
increasingly more bullish. Market pundits, traders, and even high
profile money managers are stating publicly that the easy trade over the
next few years will simply be being long high quality stocks. While
time may prove these managers wise, it is likely a bit early to be that
bullish.
As a trader, our job is to create profits consistently regardless of
price action. The best traders are masters of blocking out the noise and
emotion, and letting various forms of data guide their decision making.
At this point in time the bulls have the bears pushed against key
resistance at the SPX 1150 area. However, the bears have their eyes set
on the 1130 level and from there the key SPX 1040 support area.
If the S&P 500 breaks out over the 1150 area with strong volume
we could move higher to test recent highs; however, if the 1040 area
were to give way to the bears the bullish parade would end. At this
point in time, it is too early to tell which side is going to win this
battle. The monthly chart of SPX tells the entire story.
Until proven otherwise, my bias is to the downside. What might
surprise most readers is the reasoning behind my thinking. My
expectation of lower prices has nothing to do with macro economic
conditions, it has nothing to do with unprecedented intervention that we
have witnessed by the United States federal government, and it has
nothing to do with housing numbers. The reasoning behind potentially
lower prices is simple, defined risk. The SPX chart above and even the
daily chart listed below are both indicative that the SPX 1150 area is a
critical psychological level for market participants. We are literally
at a precipice right here, right now.
When major resistance or support is very near the current spot price
of any underlying, typically low risk/reward setups can be found. After
spinning through several ideas and option strategies, an out of the
money butterfly spread seemingly made a lot of sense. The out of the
money butterfly spread would benefit from the passage of time and would
not be as exposed to a comeuppance in volatility. This strategy could
produce a great potential return for a defined amount of risk.
After some brief analysis, the best proxy was using the Spider ETF
SPY as opposed to the SPX index. The bid/ask spreads are quite wide on
SPX at times, particularly when volatility is rising. Consequently, it
can be arduous to get decent fills from the SPX market makers in rapidly
moving market conditions which seem to be the norm recently. Besides
the normal option expiration on monthly or quarterly basis, options that
expire every week have grown in popularity recently. A primary reason
why volumes have exploded is due to the weekly expirations routine
offering of unbelievable risk/reward setups, particularly through the
utilization of Theta (time) decay trading setups.
After running through various expiration dates, it made since to
utilize the October weekly options that expire on Friday, October 8.
Since I have a bias to the downside, I used an out of the money put
butterfly. Traditional butterflies are typically written where the
current price is straddled by the wings of the butterfly spread. In an
out of the money butterfly, an option trader places the entire position
out of the money. It helps reduce the cost of the butterfly, and because
the option contracts are out of the money, they are not impacted as
harshly by rising volatility. In addition, these out of the money
butterflies usually have very attractive risk/reward characteristics.
SPY was trading around $114.13/share at the close on Thursday, so the
out of the money butterfly I constructed had the following strikes:
Long 1 OCT WKLY. SPY 108 Put / Short 2 OCT WKLY. SPY 111 Puts / Long 1
OCT WKLY. SPY 114 Put. Here is a snapshot of the SPY October weekly
option chain as of the close Thursday:
The Thursday closing option prices are as follows for the butterfly
mentioned above: SPY 108 Put = $18/contract; SPY 111 Put = $37/contract;
SPY 114 Put = $127/contract. The total cost to place the out of the
money SPY weekly put butterfly would have been $71 per side (not
including commissions). The maximum gain at expiration on this trade
would be a close at $111/share on SPY and it would produce a profit
around $225 (not including commission).
Clearly we would not expect to achieve the maximum gain, but this
trade would produce a profit if SPY closed between $108.70/share and
$113.30/share at expiration (October 8). The profitability chart is
below; keep in mind that the red line is the valuation at expiration and
the white line would be the profit based on that particular day.
Obviously market conditions throughout the trading day Friday and
next week will alter the prices and implied volatility of this trade.
This should not be viewed as a trade that should be taken, but an
example of what kind of returns are possible for option traders that
want to use out of the butterflies with a directional bias.
The most exciting thing about a trade like this is that the trader
can crisply define his/her risk. When the maximum risk is a specified
amount, managing risk becomes almost arbitrary. A trader simply
determines how much he/she is willing to risk/lose, and simply places
the trade. A mere $142 risk could produce a potential profit well over
$450! Keep in mind, that should price move within the confines of the
outer strikes (wings) of the butterfly, it might make sense to take
profits depending on the size of a trader’s position. Typically I like
to take profits once price action has produced a gain of 10-20%
depending on market conditions, time frame, and the strategy that I am
using. After taking profits, I typically utilize contingent stop orders
for the remainder of my position and manage it accordingly.
There are additional manipulations that could be made if price looked
like it were going to break below the 108 strike level that would allow
this trade to either remain essentially flat or potentially profit even
more. Additionally, a similar trade using calls could be placed using
the weekly call strikes 115/118/121 for a trader who was bullish.
Regardless of a trader’s directional bias, the beauty of options is not
only their ability to produce setups where risk is clearly defined, but
the potential to manipulate a position in real time allows for
fluctuations in price action or market conditions.
As for the direction of the market, who knows what the next six
trading sessions will bring. Sometimes not trading is the best trade,
but if you absolutely feel you must have some exposure, keep positions
small, risk exposure tight, and do not hesitate to take profits – easier
trades lie ahead.
At Obama's Town Hall meeting recently, I asked the President when he was going to "stop whacking Wall Street like a piñata?" Critics took the comment and ran with it, indicating that I'm a Wall Street elitist who is out of touch with Main Street. The piñatas started coming to my office and Jon Stewart said that I was a new cast member for "Jersey Shore." "What's up with the piñatas being filled with regular candy?" I joked, "After all I am a Wall Street elitist deserving of Godiva." As for Mr. Stewart, my 18-year-old son who enjoyed his invective (what kid doesn't like seeing their old man roasted) said, "Dad, how can you be a Jersey Shore cast member and a Wall Street elitist at the same time?" One of the huge misconceptions that I want to state clearly is that I am one of the founders of two small businesses in asset management, and have not been the recipient of bailout money. Both of these businesses were small enough to fail and had to be managed prudently in the crisis.
Something is rotten with the rhetoric in our society; it is divisive and polarizing and doing nothing to heal our nation's current woes. Perhaps the way I worded my question was off, but I do not feel apologetic for the underlying message. Wall Street has been beset with problems. The cycle of greed and personal aggrandizement and lifestyle grandstanding is an affront to any American. Yes, there are nefarious rogues on Wall Street who have contributed to the financial crisis and helped to exacerbate the steep recession. There is no debate about that. The fact that banks accepted federal bailout money, and with the tone deafness of a chimpanzee trying to play Mozart paid out egregious bonuses, has certainly contributed to the collective societal anger and the horrific public perception of Wall Street. The sentiment is so bad that perhaps here I need to apologize to all of the world's chimpanzees for the comparison.
Many people did the wrong thing and collectively the financial services leaders needed to act with a greater social conscience. We can and need to do better. The better side of Wall Street is when it is acting as an efficient mechanism of capital formation and capital flow, which helps businesses invest. I am certain that if our goals are to have more jobs, wage growth and a return to the economic prosperity that we as a nation are capable of, this angry dialogue is doing more harm than good.
I understand that it is easy to vilify the world of Wall Street and finger point at the wealthy, especially in a time when so many are struggling. However, by attacking all of Wall Street, the pundits and the President are failing to recognize several key facts. Making sweeping over-generalizations is classically un-American. Was every person in the oil industry responsible for the BP spill or everyone at Enron responsible for bankruptcy and scandal? Are we saying everyone who works in real estate and finance is responsible for the sub-prime mortgage crisis? According to the Bureau of Labor Statistics, there were 7.576 million employees working in the "financial activities" sector as of August 2010. Are all of these people to be criticized and ridiculed? I am just not going to accept that and I am going to implore you not to as well. Most of these people are honest, charitable and have their clients' interests and families at heart. Scapegoating the whole industry is unfair and demoralizing.
In addition to the executive responsibility of handling and managing the government, the President has an important voice that sets the tone for much of our national discourse. He is President for all of the people and while the populist rhetoric may result in some short term applause and positive polling, it is hurting our ability as a nation to heal; Main Street, Wall Street and Washington. It also sets the President up for the perception that he is anti-business. Despite the fact that the President and his staff view themselves as pro-business, by continuing to bash an industry that represents approximately 15% of the S&P 500's market capitalization, the anti-business perception will remain and cause huge damage to the national psyche. Intuitively we all know that we need the nation's business communities to do well and if the President is out there seeking populist applause our collective fears become irrational. What if he is a socialist? What if he is going to tax me or over regulate me into a state of poverty? How can I, as a business person, really know what all of the costs are to hire more people and grow? This uncertainty is aiding and abetting the new normal of stagnant to little private sector job creation. Until businesses start hiring again, Main Street will suffer. We will watch as countries like China, India and Brazil outpace us by close to three to one and that will not be easy. Bring down the rhetoric of anger and raise up that of healing and it will have a dramatically positive psychological effect on the country and the economy. Let us all heal together.
The other problem with the angry, unforgiving rhetoric is it lays the foundation for class warfare. The experiment that is America, what Lincoln described as the "hope of the earth" became so when it was abundantly clear that here in this great land you could accomplish anything with enough grit and hard work. Here you could move economic classes in one generation and through the mechanisms of the free market achieve what everyone wants in this country -- our own individual piece of the American Dream. Our ancestors that came from Europe or other parts of the world recognized the lack of class mobility and personal freedoms when a government becomes too intrusive or a country too set in its aristocratic ways. Americans want America to stay America, not turn into the statism and stagnation of the countries that our forefathers took enough risk to leave. When we trample "fat cats" we are setting up a division that none of us truly want.
There are many in this world who set out looking to make money, but also enjoy or have a passion for what they do. How is Wall Street different from people who set their sights on making a career as a doctor or lawyer, school principal or rock star? If you work hard at your craft and are successful at it does that make you greedy? Or just living the American dream? Most who walk on Main Street and Wall Street recognize that we are connected and much about our lives are the same. Some people are rich and some are poor, but all are trying to do the best they can and set up the next generation for success. My parents were raised humbly; neither attended college but also never once begrudged anyone who was perceived to have money. What they wanted is what just about all of us want -- for their children to do better than themselves. It is classically American never to begrudge the success of others but through the processes of our meritocratic system to reach our own level of success.
When American entrepreneurs and business leaders are doing better it is better for the nation. Jobs are created, capital is invested and our living standards improve. There is no doubt that we need greater responsibility and accountability from our business leaders, not only on Wall Street but throughout the society. The legendary Goldman Sachs senior partner, John Weinberg, often said, "Some people grow; other people swell. You better figure out quickly who you are." Growing right now at this moment in our history means forgiveness and putting aside the anger for what happened and focusing on what we can do together. It has been a humbling time, but if we come together now, we can recapture the American can do-ism and the optimistic spirit that has made us the most economically powerful and philanthropic people in the history of the planet. The American Dream is all we have. It is the dream that we cling to and want to keep alive for all Americans. We have done it before and will do it again. The roads we each travel on, Main Street, Wall Street or Pennsylvania Avenue are all connected. We need to be conscious of this symbiosis in order to be mutually successful. It's time now for all of us to move from piñata to peace pipe.
Anthony Scaramucci is founder and managing partner of SkyBridge Capital, a global alternative investment firm. He is a regular contributor to CNBC and is the author of Goodbye Gordon Gekko: How to Find Your Fortune Without Losing Your Soul.
bench craft company reviews
Small Business <b>News</b>: Social Media Mavens
Social media has created a new vocabulary for small business, a vocabulary that encompasses not only marketing but networking and collaborating as well.
Fox <b>News</b> Ratings HUGE For Final Chilean Miners' Rescue
Fox News saw a staggering 7 million viewers as the final miner was rescued in Chile Wednesday night. The network averaged 7.066 million total viewers in the 8PM hour (when the final miner was rescued) and 4.862 million total viewers in ...
CNN and Fox <b>News</b> Top Channels for Mine Rescue - NYTimes.com
Ratings for the cable news channels were inflated as the Chilean miners were rescued one by one.
bench craft company reviews
Submitted by Options Trading Signals
Learn How Out-of-the-Money Butterflies Create Profits Trading SPX
Over the past few weeks the broad stock market has seemingly grown
increasingly more bullish. Market pundits, traders, and even high
profile money managers are stating publicly that the easy trade over the
next few years will simply be being long high quality stocks. While
time may prove these managers wise, it is likely a bit early to be that
bullish.
As a trader, our job is to create profits consistently regardless of
price action. The best traders are masters of blocking out the noise and
emotion, and letting various forms of data guide their decision making.
At this point in time the bulls have the bears pushed against key
resistance at the SPX 1150 area. However, the bears have their eyes set
on the 1130 level and from there the key SPX 1040 support area.
If the S&P 500 breaks out over the 1150 area with strong volume
we could move higher to test recent highs; however, if the 1040 area
were to give way to the bears the bullish parade would end. At this
point in time, it is too early to tell which side is going to win this
battle. The monthly chart of SPX tells the entire story.
Until proven otherwise, my bias is to the downside. What might
surprise most readers is the reasoning behind my thinking. My
expectation of lower prices has nothing to do with macro economic
conditions, it has nothing to do with unprecedented intervention that we
have witnessed by the United States federal government, and it has
nothing to do with housing numbers. The reasoning behind potentially
lower prices is simple, defined risk. The SPX chart above and even the
daily chart listed below are both indicative that the SPX 1150 area is a
critical psychological level for market participants. We are literally
at a precipice right here, right now.
When major resistance or support is very near the current spot price
of any underlying, typically low risk/reward setups can be found. After
spinning through several ideas and option strategies, an out of the
money butterfly spread seemingly made a lot of sense. The out of the
money butterfly spread would benefit from the passage of time and would
not be as exposed to a comeuppance in volatility. This strategy could
produce a great potential return for a defined amount of risk.
After some brief analysis, the best proxy was using the Spider ETF
SPY as opposed to the SPX index. The bid/ask spreads are quite wide on
SPX at times, particularly when volatility is rising. Consequently, it
can be arduous to get decent fills from the SPX market makers in rapidly
moving market conditions which seem to be the norm recently. Besides
the normal option expiration on monthly or quarterly basis, options that
expire every week have grown in popularity recently. A primary reason
why volumes have exploded is due to the weekly expirations routine
offering of unbelievable risk/reward setups, particularly through the
utilization of Theta (time) decay trading setups.
After running through various expiration dates, it made since to
utilize the October weekly options that expire on Friday, October 8.
Since I have a bias to the downside, I used an out of the money put
butterfly. Traditional butterflies are typically written where the
current price is straddled by the wings of the butterfly spread. In an
out of the money butterfly, an option trader places the entire position
out of the money. It helps reduce the cost of the butterfly, and because
the option contracts are out of the money, they are not impacted as
harshly by rising volatility. In addition, these out of the money
butterflies usually have very attractive risk/reward characteristics.
SPY was trading around $114.13/share at the close on Thursday, so the
out of the money butterfly I constructed had the following strikes:
Long 1 OCT WKLY. SPY 108 Put / Short 2 OCT WKLY. SPY 111 Puts / Long 1
OCT WKLY. SPY 114 Put. Here is a snapshot of the SPY October weekly
option chain as of the close Thursday:
The Thursday closing option prices are as follows for the butterfly
mentioned above: SPY 108 Put = $18/contract; SPY 111 Put = $37/contract;
SPY 114 Put = $127/contract. The total cost to place the out of the
money SPY weekly put butterfly would have been $71 per side (not
including commissions). The maximum gain at expiration on this trade
would be a close at $111/share on SPY and it would produce a profit
around $225 (not including commission).
Clearly we would not expect to achieve the maximum gain, but this
trade would produce a profit if SPY closed between $108.70/share and
$113.30/share at expiration (October 8). The profitability chart is
below; keep in mind that the red line is the valuation at expiration and
the white line would be the profit based on that particular day.
Obviously market conditions throughout the trading day Friday and
next week will alter the prices and implied volatility of this trade.
This should not be viewed as a trade that should be taken, but an
example of what kind of returns are possible for option traders that
want to use out of the butterflies with a directional bias.
The most exciting thing about a trade like this is that the trader
can crisply define his/her risk. When the maximum risk is a specified
amount, managing risk becomes almost arbitrary. A trader simply
determines how much he/she is willing to risk/lose, and simply places
the trade. A mere $142 risk could produce a potential profit well over
$450! Keep in mind, that should price move within the confines of the
outer strikes (wings) of the butterfly, it might make sense to take
profits depending on the size of a trader’s position. Typically I like
to take profits once price action has produced a gain of 10-20%
depending on market conditions, time frame, and the strategy that I am
using. After taking profits, I typically utilize contingent stop orders
for the remainder of my position and manage it accordingly.
There are additional manipulations that could be made if price looked
like it were going to break below the 108 strike level that would allow
this trade to either remain essentially flat or potentially profit even
more. Additionally, a similar trade using calls could be placed using
the weekly call strikes 115/118/121 for a trader who was bullish.
Regardless of a trader’s directional bias, the beauty of options is not
only their ability to produce setups where risk is clearly defined, but
the potential to manipulate a position in real time allows for
fluctuations in price action or market conditions.
As for the direction of the market, who knows what the next six
trading sessions will bring. Sometimes not trading is the best trade,
but if you absolutely feel you must have some exposure, keep positions
small, risk exposure tight, and do not hesitate to take profits – easier
trades lie ahead.
At Obama's Town Hall meeting recently, I asked the President when he was going to "stop whacking Wall Street like a piñata?" Critics took the comment and ran with it, indicating that I'm a Wall Street elitist who is out of touch with Main Street. The piñatas started coming to my office and Jon Stewart said that I was a new cast member for "Jersey Shore." "What's up with the piñatas being filled with regular candy?" I joked, "After all I am a Wall Street elitist deserving of Godiva." As for Mr. Stewart, my 18-year-old son who enjoyed his invective (what kid doesn't like seeing their old man roasted) said, "Dad, how can you be a Jersey Shore cast member and a Wall Street elitist at the same time?" One of the huge misconceptions that I want to state clearly is that I am one of the founders of two small businesses in asset management, and have not been the recipient of bailout money. Both of these businesses were small enough to fail and had to be managed prudently in the crisis.
Something is rotten with the rhetoric in our society; it is divisive and polarizing and doing nothing to heal our nation's current woes. Perhaps the way I worded my question was off, but I do not feel apologetic for the underlying message. Wall Street has been beset with problems. The cycle of greed and personal aggrandizement and lifestyle grandstanding is an affront to any American. Yes, there are nefarious rogues on Wall Street who have contributed to the financial crisis and helped to exacerbate the steep recession. There is no debate about that. The fact that banks accepted federal bailout money, and with the tone deafness of a chimpanzee trying to play Mozart paid out egregious bonuses, has certainly contributed to the collective societal anger and the horrific public perception of Wall Street. The sentiment is so bad that perhaps here I need to apologize to all of the world's chimpanzees for the comparison.
Many people did the wrong thing and collectively the financial services leaders needed to act with a greater social conscience. We can and need to do better. The better side of Wall Street is when it is acting as an efficient mechanism of capital formation and capital flow, which helps businesses invest. I am certain that if our goals are to have more jobs, wage growth and a return to the economic prosperity that we as a nation are capable of, this angry dialogue is doing more harm than good.
I understand that it is easy to vilify the world of Wall Street and finger point at the wealthy, especially in a time when so many are struggling. However, by attacking all of Wall Street, the pundits and the President are failing to recognize several key facts. Making sweeping over-generalizations is classically un-American. Was every person in the oil industry responsible for the BP spill or everyone at Enron responsible for bankruptcy and scandal? Are we saying everyone who works in real estate and finance is responsible for the sub-prime mortgage crisis? According to the Bureau of Labor Statistics, there were 7.576 million employees working in the "financial activities" sector as of August 2010. Are all of these people to be criticized and ridiculed? I am just not going to accept that and I am going to implore you not to as well. Most of these people are honest, charitable and have their clients' interests and families at heart. Scapegoating the whole industry is unfair and demoralizing.
In addition to the executive responsibility of handling and managing the government, the President has an important voice that sets the tone for much of our national discourse. He is President for all of the people and while the populist rhetoric may result in some short term applause and positive polling, it is hurting our ability as a nation to heal; Main Street, Wall Street and Washington. It also sets the President up for the perception that he is anti-business. Despite the fact that the President and his staff view themselves as pro-business, by continuing to bash an industry that represents approximately 15% of the S&P 500's market capitalization, the anti-business perception will remain and cause huge damage to the national psyche. Intuitively we all know that we need the nation's business communities to do well and if the President is out there seeking populist applause our collective fears become irrational. What if he is a socialist? What if he is going to tax me or over regulate me into a state of poverty? How can I, as a business person, really know what all of the costs are to hire more people and grow? This uncertainty is aiding and abetting the new normal of stagnant to little private sector job creation. Until businesses start hiring again, Main Street will suffer. We will watch as countries like China, India and Brazil outpace us by close to three to one and that will not be easy. Bring down the rhetoric of anger and raise up that of healing and it will have a dramatically positive psychological effect on the country and the economy. Let us all heal together.
The other problem with the angry, unforgiving rhetoric is it lays the foundation for class warfare. The experiment that is America, what Lincoln described as the "hope of the earth" became so when it was abundantly clear that here in this great land you could accomplish anything with enough grit and hard work. Here you could move economic classes in one generation and through the mechanisms of the free market achieve what everyone wants in this country -- our own individual piece of the American Dream. Our ancestors that came from Europe or other parts of the world recognized the lack of class mobility and personal freedoms when a government becomes too intrusive or a country too set in its aristocratic ways. Americans want America to stay America, not turn into the statism and stagnation of the countries that our forefathers took enough risk to leave. When we trample "fat cats" we are setting up a division that none of us truly want.
There are many in this world who set out looking to make money, but also enjoy or have a passion for what they do. How is Wall Street different from people who set their sights on making a career as a doctor or lawyer, school principal or rock star? If you work hard at your craft and are successful at it does that make you greedy? Or just living the American dream? Most who walk on Main Street and Wall Street recognize that we are connected and much about our lives are the same. Some people are rich and some are poor, but all are trying to do the best they can and set up the next generation for success. My parents were raised humbly; neither attended college but also never once begrudged anyone who was perceived to have money. What they wanted is what just about all of us want -- for their children to do better than themselves. It is classically American never to begrudge the success of others but through the processes of our meritocratic system to reach our own level of success.
When American entrepreneurs and business leaders are doing better it is better for the nation. Jobs are created, capital is invested and our living standards improve. There is no doubt that we need greater responsibility and accountability from our business leaders, not only on Wall Street but throughout the society. The legendary Goldman Sachs senior partner, John Weinberg, often said, "Some people grow; other people swell. You better figure out quickly who you are." Growing right now at this moment in our history means forgiveness and putting aside the anger for what happened and focusing on what we can do together. It has been a humbling time, but if we come together now, we can recapture the American can do-ism and the optimistic spirit that has made us the most economically powerful and philanthropic people in the history of the planet. The American Dream is all we have. It is the dream that we cling to and want to keep alive for all Americans. We have done it before and will do it again. The roads we each travel on, Main Street, Wall Street or Pennsylvania Avenue are all connected. We need to be conscious of this symbiosis in order to be mutually successful. It's time now for all of us to move from piñata to peace pipe.
Anthony Scaramucci is founder and managing partner of SkyBridge Capital, a global alternative investment firm. He is a regular contributor to CNBC and is the author of Goodbye Gordon Gekko: How to Find Your Fortune Without Losing Your Soul.
benchcraft company scam
Small Business <b>News</b>: Social Media Mavens
Social media has created a new vocabulary for small business, a vocabulary that encompasses not only marketing but networking and collaborating as well.
Fox <b>News</b> Ratings HUGE For Final Chilean Miners' Rescue
Fox News saw a staggering 7 million viewers as the final miner was rescued in Chile Wednesday night. The network averaged 7.066 million total viewers in the 8PM hour (when the final miner was rescued) and 4.862 million total viewers in ...
CNN and Fox <b>News</b> Top Channels for Mine Rescue - NYTimes.com
Ratings for the cable news channels were inflated as the Chilean miners were rescued one by one.
bench craft company reviews
bench craft company reviews
benchcraft company scam
Small Business <b>News</b>: Social Media Mavens
Social media has created a new vocabulary for small business, a vocabulary that encompasses not only marketing but networking and collaborating as well.
Fox <b>News</b> Ratings HUGE For Final Chilean Miners' Rescue
Fox News saw a staggering 7 million viewers as the final miner was rescued in Chile Wednesday night. The network averaged 7.066 million total viewers in the 8PM hour (when the final miner was rescued) and 4.862 million total viewers in ...
CNN and Fox <b>News</b> Top Channels for Mine Rescue - NYTimes.com
Ratings for the cable news channels were inflated as the Chilean miners were rescued one by one.
benchcraft company portland or
Submitted by Options Trading Signals
Learn How Out-of-the-Money Butterflies Create Profits Trading SPX
Over the past few weeks the broad stock market has seemingly grown
increasingly more bullish. Market pundits, traders, and even high
profile money managers are stating publicly that the easy trade over the
next few years will simply be being long high quality stocks. While
time may prove these managers wise, it is likely a bit early to be that
bullish.
As a trader, our job is to create profits consistently regardless of
price action. The best traders are masters of blocking out the noise and
emotion, and letting various forms of data guide their decision making.
At this point in time the bulls have the bears pushed against key
resistance at the SPX 1150 area. However, the bears have their eyes set
on the 1130 level and from there the key SPX 1040 support area.
If the S&P 500 breaks out over the 1150 area with strong volume
we could move higher to test recent highs; however, if the 1040 area
were to give way to the bears the bullish parade would end. At this
point in time, it is too early to tell which side is going to win this
battle. The monthly chart of SPX tells the entire story.
Until proven otherwise, my bias is to the downside. What might
surprise most readers is the reasoning behind my thinking. My
expectation of lower prices has nothing to do with macro economic
conditions, it has nothing to do with unprecedented intervention that we
have witnessed by the United States federal government, and it has
nothing to do with housing numbers. The reasoning behind potentially
lower prices is simple, defined risk. The SPX chart above and even the
daily chart listed below are both indicative that the SPX 1150 area is a
critical psychological level for market participants. We are literally
at a precipice right here, right now.
When major resistance or support is very near the current spot price
of any underlying, typically low risk/reward setups can be found. After
spinning through several ideas and option strategies, an out of the
money butterfly spread seemingly made a lot of sense. The out of the
money butterfly spread would benefit from the passage of time and would
not be as exposed to a comeuppance in volatility. This strategy could
produce a great potential return for a defined amount of risk.
After some brief analysis, the best proxy was using the Spider ETF
SPY as opposed to the SPX index. The bid/ask spreads are quite wide on
SPX at times, particularly when volatility is rising. Consequently, it
can be arduous to get decent fills from the SPX market makers in rapidly
moving market conditions which seem to be the norm recently. Besides
the normal option expiration on monthly or quarterly basis, options that
expire every week have grown in popularity recently. A primary reason
why volumes have exploded is due to the weekly expirations routine
offering of unbelievable risk/reward setups, particularly through the
utilization of Theta (time) decay trading setups.
After running through various expiration dates, it made since to
utilize the October weekly options that expire on Friday, October 8.
Since I have a bias to the downside, I used an out of the money put
butterfly. Traditional butterflies are typically written where the
current price is straddled by the wings of the butterfly spread. In an
out of the money butterfly, an option trader places the entire position
out of the money. It helps reduce the cost of the butterfly, and because
the option contracts are out of the money, they are not impacted as
harshly by rising volatility. In addition, these out of the money
butterflies usually have very attractive risk/reward characteristics.
SPY was trading around $114.13/share at the close on Thursday, so the
out of the money butterfly I constructed had the following strikes:
Long 1 OCT WKLY. SPY 108 Put / Short 2 OCT WKLY. SPY 111 Puts / Long 1
OCT WKLY. SPY 114 Put. Here is a snapshot of the SPY October weekly
option chain as of the close Thursday:
The Thursday closing option prices are as follows for the butterfly
mentioned above: SPY 108 Put = $18/contract; SPY 111 Put = $37/contract;
SPY 114 Put = $127/contract. The total cost to place the out of the
money SPY weekly put butterfly would have been $71 per side (not
including commissions). The maximum gain at expiration on this trade
would be a close at $111/share on SPY and it would produce a profit
around $225 (not including commission).
Clearly we would not expect to achieve the maximum gain, but this
trade would produce a profit if SPY closed between $108.70/share and
$113.30/share at expiration (October 8). The profitability chart is
below; keep in mind that the red line is the valuation at expiration and
the white line would be the profit based on that particular day.
Obviously market conditions throughout the trading day Friday and
next week will alter the prices and implied volatility of this trade.
This should not be viewed as a trade that should be taken, but an
example of what kind of returns are possible for option traders that
want to use out of the butterflies with a directional bias.
The most exciting thing about a trade like this is that the trader
can crisply define his/her risk. When the maximum risk is a specified
amount, managing risk becomes almost arbitrary. A trader simply
determines how much he/she is willing to risk/lose, and simply places
the trade. A mere $142 risk could produce a potential profit well over
$450! Keep in mind, that should price move within the confines of the
outer strikes (wings) of the butterfly, it might make sense to take
profits depending on the size of a trader’s position. Typically I like
to take profits once price action has produced a gain of 10-20%
depending on market conditions, time frame, and the strategy that I am
using. After taking profits, I typically utilize contingent stop orders
for the remainder of my position and manage it accordingly.
There are additional manipulations that could be made if price looked
like it were going to break below the 108 strike level that would allow
this trade to either remain essentially flat or potentially profit even
more. Additionally, a similar trade using calls could be placed using
the weekly call strikes 115/118/121 for a trader who was bullish.
Regardless of a trader’s directional bias, the beauty of options is not
only their ability to produce setups where risk is clearly defined, but
the potential to manipulate a position in real time allows for
fluctuations in price action or market conditions.
As for the direction of the market, who knows what the next six
trading sessions will bring. Sometimes not trading is the best trade,
but if you absolutely feel you must have some exposure, keep positions
small, risk exposure tight, and do not hesitate to take profits – easier
trades lie ahead.
At Obama's Town Hall meeting recently, I asked the President when he was going to "stop whacking Wall Street like a piñata?" Critics took the comment and ran with it, indicating that I'm a Wall Street elitist who is out of touch with Main Street. The piñatas started coming to my office and Jon Stewart said that I was a new cast member for "Jersey Shore." "What's up with the piñatas being filled with regular candy?" I joked, "After all I am a Wall Street elitist deserving of Godiva." As for Mr. Stewart, my 18-year-old son who enjoyed his invective (what kid doesn't like seeing their old man roasted) said, "Dad, how can you be a Jersey Shore cast member and a Wall Street elitist at the same time?" One of the huge misconceptions that I want to state clearly is that I am one of the founders of two small businesses in asset management, and have not been the recipient of bailout money. Both of these businesses were small enough to fail and had to be managed prudently in the crisis.
Something is rotten with the rhetoric in our society; it is divisive and polarizing and doing nothing to heal our nation's current woes. Perhaps the way I worded my question was off, but I do not feel apologetic for the underlying message. Wall Street has been beset with problems. The cycle of greed and personal aggrandizement and lifestyle grandstanding is an affront to any American. Yes, there are nefarious rogues on Wall Street who have contributed to the financial crisis and helped to exacerbate the steep recession. There is no debate about that. The fact that banks accepted federal bailout money, and with the tone deafness of a chimpanzee trying to play Mozart paid out egregious bonuses, has certainly contributed to the collective societal anger and the horrific public perception of Wall Street. The sentiment is so bad that perhaps here I need to apologize to all of the world's chimpanzees for the comparison.
Many people did the wrong thing and collectively the financial services leaders needed to act with a greater social conscience. We can and need to do better. The better side of Wall Street is when it is acting as an efficient mechanism of capital formation and capital flow, which helps businesses invest. I am certain that if our goals are to have more jobs, wage growth and a return to the economic prosperity that we as a nation are capable of, this angry dialogue is doing more harm than good.
I understand that it is easy to vilify the world of Wall Street and finger point at the wealthy, especially in a time when so many are struggling. However, by attacking all of Wall Street, the pundits and the President are failing to recognize several key facts. Making sweeping over-generalizations is classically un-American. Was every person in the oil industry responsible for the BP spill or everyone at Enron responsible for bankruptcy and scandal? Are we saying everyone who works in real estate and finance is responsible for the sub-prime mortgage crisis? According to the Bureau of Labor Statistics, there were 7.576 million employees working in the "financial activities" sector as of August 2010. Are all of these people to be criticized and ridiculed? I am just not going to accept that and I am going to implore you not to as well. Most of these people are honest, charitable and have their clients' interests and families at heart. Scapegoating the whole industry is unfair and demoralizing.
In addition to the executive responsibility of handling and managing the government, the President has an important voice that sets the tone for much of our national discourse. He is President for all of the people and while the populist rhetoric may result in some short term applause and positive polling, it is hurting our ability as a nation to heal; Main Street, Wall Street and Washington. It also sets the President up for the perception that he is anti-business. Despite the fact that the President and his staff view themselves as pro-business, by continuing to bash an industry that represents approximately 15% of the S&P 500's market capitalization, the anti-business perception will remain and cause huge damage to the national psyche. Intuitively we all know that we need the nation's business communities to do well and if the President is out there seeking populist applause our collective fears become irrational. What if he is a socialist? What if he is going to tax me or over regulate me into a state of poverty? How can I, as a business person, really know what all of the costs are to hire more people and grow? This uncertainty is aiding and abetting the new normal of stagnant to little private sector job creation. Until businesses start hiring again, Main Street will suffer. We will watch as countries like China, India and Brazil outpace us by close to three to one and that will not be easy. Bring down the rhetoric of anger and raise up that of healing and it will have a dramatically positive psychological effect on the country and the economy. Let us all heal together.
The other problem with the angry, unforgiving rhetoric is it lays the foundation for class warfare. The experiment that is America, what Lincoln described as the "hope of the earth" became so when it was abundantly clear that here in this great land you could accomplish anything with enough grit and hard work. Here you could move economic classes in one generation and through the mechanisms of the free market achieve what everyone wants in this country -- our own individual piece of the American Dream. Our ancestors that came from Europe or other parts of the world recognized the lack of class mobility and personal freedoms when a government becomes too intrusive or a country too set in its aristocratic ways. Americans want America to stay America, not turn into the statism and stagnation of the countries that our forefathers took enough risk to leave. When we trample "fat cats" we are setting up a division that none of us truly want.
There are many in this world who set out looking to make money, but also enjoy or have a passion for what they do. How is Wall Street different from people who set their sights on making a career as a doctor or lawyer, school principal or rock star? If you work hard at your craft and are successful at it does that make you greedy? Or just living the American dream? Most who walk on Main Street and Wall Street recognize that we are connected and much about our lives are the same. Some people are rich and some are poor, but all are trying to do the best they can and set up the next generation for success. My parents were raised humbly; neither attended college but also never once begrudged anyone who was perceived to have money. What they wanted is what just about all of us want -- for their children to do better than themselves. It is classically American never to begrudge the success of others but through the processes of our meritocratic system to reach our own level of success.
When American entrepreneurs and business leaders are doing better it is better for the nation. Jobs are created, capital is invested and our living standards improve. There is no doubt that we need greater responsibility and accountability from our business leaders, not only on Wall Street but throughout the society. The legendary Goldman Sachs senior partner, John Weinberg, often said, "Some people grow; other people swell. You better figure out quickly who you are." Growing right now at this moment in our history means forgiveness and putting aside the anger for what happened and focusing on what we can do together. It has been a humbling time, but if we come together now, we can recapture the American can do-ism and the optimistic spirit that has made us the most economically powerful and philanthropic people in the history of the planet. The American Dream is all we have. It is the dream that we cling to and want to keep alive for all Americans. We have done it before and will do it again. The roads we each travel on, Main Street, Wall Street or Pennsylvania Avenue are all connected. We need to be conscious of this symbiosis in order to be mutually successful. It's time now for all of us to move from piñata to peace pipe.
Anthony Scaramucci is founder and managing partner of SkyBridge Capital, a global alternative investment firm. He is a regular contributor to CNBC and is the author of Goodbye Gordon Gekko: How to Find Your Fortune Without Losing Your Soul.
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Small Business <b>News</b>: Social Media Mavens
Social media has created a new vocabulary for small business, a vocabulary that encompasses not only marketing but networking and collaborating as well.
Fox <b>News</b> Ratings HUGE For Final Chilean Miners' Rescue
Fox News saw a staggering 7 million viewers as the final miner was rescued in Chile Wednesday night. The network averaged 7.066 million total viewers in the 8PM hour (when the final miner was rescued) and 4.862 million total viewers in ...
CNN and Fox <b>News</b> Top Channels for Mine Rescue - NYTimes.com
Ratings for the cable news channels were inflated as the Chilean miners were rescued one by one.
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Small Business <b>News</b>: Social Media Mavens
Social media has created a new vocabulary for small business, a vocabulary that encompasses not only marketing but networking and collaborating as well.
Fox <b>News</b> Ratings HUGE For Final Chilean Miners' Rescue
Fox News saw a staggering 7 million viewers as the final miner was rescued in Chile Wednesday night. The network averaged 7.066 million total viewers in the 8PM hour (when the final miner was rescued) and 4.862 million total viewers in ...
CNN and Fox <b>News</b> Top Channels for Mine Rescue - NYTimes.com
Ratings for the cable news channels were inflated as the Chilean miners were rescued one by one.
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Small Business <b>News</b>: Social Media Mavens
Social media has created a new vocabulary for small business, a vocabulary that encompasses not only marketing but networking and collaborating as well.
Fox <b>News</b> Ratings HUGE For Final Chilean Miners' Rescue
Fox News saw a staggering 7 million viewers as the final miner was rescued in Chile Wednesday night. The network averaged 7.066 million total viewers in the 8PM hour (when the final miner was rescued) and 4.862 million total viewers in ...
CNN and Fox <b>News</b> Top Channels for Mine Rescue - NYTimes.com
Ratings for the cable news channels were inflated as the Chilean miners were rescued one by one.
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benchcraft company portland or
Small Business <b>News</b>: Social Media Mavens
Social media has created a new vocabulary for small business, a vocabulary that encompasses not only marketing but networking and collaborating as well.
Fox <b>News</b> Ratings HUGE For Final Chilean Miners' Rescue
Fox News saw a staggering 7 million viewers as the final miner was rescued in Chile Wednesday night. The network averaged 7.066 million total viewers in the 8PM hour (when the final miner was rescued) and 4.862 million total viewers in ...
CNN and Fox <b>News</b> Top Channels for Mine Rescue - NYTimes.com
Ratings for the cable news channels were inflated as the Chilean miners were rescued one by one.
benchcraft company scam
Insert cliché opening paragraph about the economy and nowadays people are turning to work online, blah, blah, blah. Oh, wait, you're actually reading? Sorry. Well, then, let me say this. Making money online is possible, but, just as everyone will tell you (except for the scammers), don't expect to "get rich" or "get rich quick". You have to put in time, effort, and most of all, work.
Things to Avoid
1. Anything that asks for payment. Never, ever spend your time on these. You will be losing money and making someone else's wallet fat for them without them having to do anything but scam you. I once heard it phrased like this, you don't have to pay for a job interview, do you? It's the same concept here.
2. Paid-to-try/trial offers. Generally, these are a scam. Yes, they will probably look like a pretty profit, but many of them aren't free to try or charge you after a certain trial period and are very hard to get rid of. They cause frustration and money-loss and are NOT worth it.
3. Anything that doesn't tell you what you're doing upfront. This is kind of obvious. If it's shady, it's probably a scam.
4. "Get rich quick"s. You don't get rich quick any time in life unless you win the lottery or something like that. Work is work. Everyone has to earn their money and they don't get rich quick doing it.
Really, just use some common sense and you should be fine.
What I have learned is that a few places, while they don't make much money for me, are slow and steady and reliable. (Other than freelancing, that is. Freelancing is an entirely different set of ideas.)
BeRuby.com
BeRuby is a site that pays you very small amounts when you click on websites through their web-page. Many of the sites I go to every day are there, and many that I don't are also there. (Click on them anyway.) They also pay you for signing up at certain places and cash back for shopping at stores they have deals with, many of which are hotel sites and airline sites and big names, like K-Mart.
It has a $10.00 payout minimum and pays to PayPal. While I don't expect to make much here (I'm not), the extra couple bucks I gain from two minutes of effort and the time I spent on the computer every day is worth it to me. I don't have to change anything up or spend hours filling in stupid surveys.
See here.
Number two: Inbox Dollars
This site sends you emails, which you can open in your inbox or in your inbox on their site. They also offer a variety of ways to otherwise make money, including surveys, trials, signing up for things their advertisers send them, games, shopping, etc.
Their payout is $30.00, which seems like a lot for a paid-to-open site, but like I said, it doesn't happen overnight.
See here.
Number three: SendEarnings
They are, literally, identical to Inbox Dollars. They are even run by the same company. They have the same payout and send you the same emails and offers, so you can really get paid twice for opening the same email, which some might call scamming - except for the fact that they let you sign up under the same name and everything. Their pay-out is also $30.00.
See here.
Number four: Cash Crate
Similar to the above two, Cash Crate has a good reputation, a clean layout, and a $20.00 payout which is relatively easy to reach. They are a similar set-up to the above two: surveys, offers, etc. I personally like Cash Crate the best.
See here.
Number five: ChaCha!
If you don't know what ChaCha is, it is a service run through cellphones and call ins. People send questions to ChaCha and get answers from real-life people - who might be you. And you can also be paid to do this. It's a relatively complex process. You must go through training and pass a test to get hired, which takes a couple of days, but it's worth it if you can research and type quickly.
A note worth mentioning: they only work properly in FireFox.
See here.
It is possible to get paid through online work that isn't freelance writing or starting your own business. Once again, keep in mind to avoid scams, that it won't happen overnight, that you must work at it, and that it is possible.
Good luck.
Sources:
Personal Experience
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Small Business <b>News</b>: Social Media Mavens
Social media has created a new vocabulary for small business, a vocabulary that encompasses not only marketing but networking and collaborating as well.
Fox <b>News</b> Ratings HUGE For Final Chilean Miners' Rescue
Fox News saw a staggering 7 million viewers as the final miner was rescued in Chile Wednesday night. The network averaged 7.066 million total viewers in the 8PM hour (when the final miner was rescued) and 4.862 million total viewers in ...
CNN and Fox <b>News</b> Top Channels for Mine Rescue - NYTimes.com
Ratings for the cable news channels were inflated as the Chilean miners were rescued one by one.
big seminar 14
Small Business <b>News</b>: Social Media Mavens
Social media has created a new vocabulary for small business, a vocabulary that encompasses not only marketing but networking and collaborating as well.
Fox <b>News</b> Ratings HUGE For Final Chilean Miners' Rescue
Fox News saw a staggering 7 million viewers as the final miner was rescued in Chile Wednesday night. The network averaged 7.066 million total viewers in the 8PM hour (when the final miner was rescued) and 4.862 million total viewers in ...
CNN and Fox <b>News</b> Top Channels for Mine Rescue - NYTimes.com
Ratings for the cable news channels were inflated as the Chilean miners were rescued one by one.
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