Market Report Is the Trend changing
By Todd Horwitz on Sep 12, 2021 at 9:13:10 AM

Market Report Is the Trend changing

By

 

Todd Horwitz Chief Strategist BubbaTrading.com

Be Prepared not Surprised.

Although all equity markets were lower last week the options markets continued with a bullish posture. However, the trend appears to be changing. With last week and this week being holiday week’s its hard to make any judgements.

The week ahead promises to be interesting, there is the Jewish Holiday of Yom Kippur followed by September’s triple witching expiration. We know that volumes will be light in the middle of the week with big volume on Friday. This action is expected and should have no real effect on markets unless its directional.

The best course of action is observation, discipline, and patience. Trying to make something happen in these dull markets is really a fool’s game. Price action always dictates what’s to come and this time will be no different. There are may reasons to believe a sell off is coming however price will tell us.

The option strategies continue to lean bullish with call buying leading the way. Rounding out the top 5 were bull puts, bull put spreads, bear puts, and bear put spreads. The strategies themselves don’t tell the entire story; they are just another piece of the puzzle.

The bull’s leaderboard has been more mixed that the past few months with AAPL, DKNG, SPY, IWM and SPY as the top 5 bullish trades last week. The Bears were led by XLE, VXX, SPCE, ZM and GOLD. With the holiday and triple witching this week, anything can happen. Be prepared not surprised

As traders and investors, we have one thing to remember, follow the trend of the market. Be patient disciplined and leave your emotions out. The most important thing to remember is money management and self-control. 

Todd “Bubba” Horwitz

BubbaTrading.com


Market Report All bullish all the time
By Todd Horwitz on Aug 28, 2021 at 3:54:32 PM

As the markets get slower the bulls continue to buy. We saw new highs in the S+P and Nasdaq last week, a higher Dow and the Russell starting to make some noise. We should always remember that dull markets tend to drift higher which brings the old Wall Street adage “Never sell a dull market”.

Trading doesn’t get much slower than we have been witnessing for most of the summer. This week should be the slowest of them all with the Labor Day Holiday end of summer vacation time. Europe is still basically closed, and most U.S. traders are on vacation. This happens every summer.

The markets will go up until they don’t, the real question: Are stocks trading from fundamentals or is the added money supply and low interest rates? We would argue that the rally is a creation of the FED and never-ending expansion of the money supply.

In the options world Call buyers remain atop the leader board followed by Bull Put Spreads and then Bull Puts. There is very little negativity around these markets which is driving the VIX lower. We must always remember complacency is the architecture of our downfall. We make no predictions just point out the facts.

The bullish symbols for the week were a little mixture of Gaming and Tech. DKNG led the way followed by NVDA, TSLA, SPX and WYNN. The Bears were led by a mixture as well with SPCE leading followed by XLE, SPY, SWKS and XLF. Look for quiet trade, this is no time to be aggressive.

As traders and investors, we have one thing to remember, follow the trend of the market. Be patient disciplined and leave your emotions out. The most important thing to remember is money management and self-control. 

Todd “Bubba” Horwitz

BubbaTrading.com


When Are Calls and Puts Early Exercises?
By - Dan Raju, CEO at Tradier on Aug 27, 2021 at 10:01:57 AM

Business-finance-money-graphs-index-charts-trader-computer-screen-block-chain-forex-trader_t20_ZxnGjR

The variety of options available to the American investor can be overwhelming.  Let’s start by answering: What are options? 

What are Options?

Options are a type of derivative security whose value is linked to an underlying asset, like a stock, commodity, future, or the like.  Investors can either buy or sell option contracts, which give the holder or owner of the option the right, but not the obligation to either buy or sell the underlying asset, at a predetermined price by a predetermined time.  The two standard types of options are calls and puts.  Many things go into the pricing of calls and puts such as time to expiration, implied volatility, and interest rates to name a few. 

Call and Put Options

Call and put options are different sides of the coin. Both are derivative contracts on an underlying asset.  However, they behave in opposite ways. Let’s break down how these options work.

What Is a Call Option?

Call options give the option buyer, or holder, the right, but not the obligation, to buy the underlying asset or instrument at a specified price within a specific time period. A call buyer profits when the underlying asset increases in price or when implied volatility increases.

A call option may be contrasted with a put option, which gives the holder the right to sell the underlying asset at a specified price on or before expiration.

What Is a Put Option?

A put option is a contract that gives the owner the right, but not the obligation, to sell (or sell short) a specified amount of an underlying asset at a predetermined price by a specified time. The predetermined price that a holder of the put option can sell the underlying asset is called the strike price.

Put options can increase in value as the underlying asset falls or when implied volatility rises. Conversely, puts decrease in value when the underlying asset rises or implied volatility declines in addition to the passage of time.

Option Exercise and Assignment:

Both calls and puts expire at some point in time, on their expiration date. When they expire, calls and puts either expire into stock or they expire worthless. Calls are in the money when the stock price is greater than the strike price. Puts expire in the money when the put strike is greater than the stock price. Holders of calls upon exercise receive long stock and holders of puts upon exercise receive short stock.  If you are short call or put options and they get assigned, you get the opposite of what a holder would get as the result of the exercise.  

Early Exercise

So, what exactly is an early exercise or assignment? Early exercise or assignment of an option occurs when a holder of either a call or put exercises the option PRIOR to the option’s expiration. The most common reason for early exercise of a call is to receive a dividend, and the most common reason for early exercise of a put is to manage interest rate exposure.  These two conditions are the most common but others exist. If you are a holder of an option, you control the exercise of the option.  If you are short an option, you can be assigned when the holder chooses to exercise an option early.

Want to learn more about the art of trading and get additional tips? Subscribe to our YouTube channel and tune in every week for new episodes of OBTV!


Market Report Mixed markets on Taper Talk
By Todd Horwitz on Aug 22, 2021 at 8:32:53 AM

 Market Report Mixed markets on Taper Talk

By

 

Todd Horwitz Chief Strategist BubbaTrading.com

Be Prepared not Surprised.

Markets remain slow as we approach the end of summer. Last week markets were slightly lower with a one-day selloff after the FOMC minutes were released. The talk of tapering sent markets lower while remaining in consolidation.

Markets are in the dog days of summer in extended period of congestion. The markets are telling us that a big move is coming with direction to be determined. The trend is higher in all indexes except for the Russell.

The FED reports from Jackson Hole, Wyoming this week. There isn’t much expectation no matter what they say or do. The FED has been hinting towards tapering but usually back down when the markets react adversely. The biggest problem is the FED refuses to acknowledge inflation.

The option markets continue with a bullish sentiment, Call buying led the way again however the rest of the top 5 strategies for the week were mixed. Bull puts have slowed replaced by Bear puts and Calls. The VIX remains weak and shows no real signs of moving.

The bull symbols had a little variety this week with AAPL, SPY, NVDA, IWM and TSLA leading the way. On the Bear side commodity ETFs led the way with GLD, UNG, AG leading the way.

As traders and investors, we have one thing to remember, follow the trend of the market. Be patient disciplined and leave your emotions out. The most important thing to remember is money management and self-control. 

Todd “Bubba” Horwitz

BubbaTrading.com


The Rise of Active Trading
By - Dan Raju, CEO at Tradier on Aug 19, 2021 at 11:01:57 AM

All-in-mobile-phone_t20_mopVrd

As markets continue to grow and evolve, so do the strategies for trading in them. More and more investors are looking to trade in their buy-and-hold strategy for a more active approach, realizing that stocks can be traded like commodities. In order to stay ahead of the curve, it's important to know what these new traders are doing with their money and why they're jumping ship from passive investing strategies. We'll take a look at some of the reasons behind this shift and how you might want to start thinking about your own investments in light of this change.  There's no such thing as a one-size-fits-all approach when it comes to trading stock - so we hope you find something useful here!

Active Trading: Why is it on the rise?

Active trading is the act of buying and selling securities based on short-term movements to profit from the price movement. The mentality associated with an active trading strategy differs from a long-term, buy-and-hold strategy in that it relies more heavily on capturing trends or market swings rather than simply holding onto assets for extended periods of time. Active traders capitalize on higher payoffs because they can take advantage of opportunities as soon as they arise, whereas those who rely solely on passive investment strategies will have less control over when opportunities come knocking.

Advances in technology have led to a new wave of demand for option strategy backtesting, P&L probabilities, and risk analysis metrics. With so many different features available on financial apps today such as Monte Carlo simulations and delta hedging abilities, people are able to go about their day without having the need to be glued to a computer screen all day long. Nowadays you can even find self-directed auto management options that allow your portfolio strategies to run themselves which is both convenient and productive.

The vast array of options education on the internet has opened up a world without bounds for people who once thought that they couldn't invest and trade stocks like Wall Street pros do. People have also begun to understand that using these tools can offer much greater leverage over straight stock trades when used correctly which offers opportunities to make more money with less risk than ever before!

The many different styles of trading have their own pros and cons in terms of risk versus reward factors. Some traders want a high-risk/high-reward gamble while others are content with the more stable lower returns on investment that come from less risky strategies like day or swing trading stocks.

Different Styles of Active Trading

Day trading is the most well-known style of active investing. It can be considered a pseudonym for all forms of actively managing one's own investment strategy. Day traders, as their name implies, are quick with buying and selling securities within the same day.

Traditionally, day trading is an activity that has been left to professionals. This primarily consisted of specialists or market makers who are experienced in the field. But now with electronic trading avenues opening up for novice traders as well, anyone can partake in this practice and make a profit by tapping into the resources.

Each strategy has its risks and rewards, and it will require a good deal of experience and expertise to figure out which one will suit you best. Fortunately, the proliferation of online trading has simplified this process by allowing new traders to learn from real market pros in a safe environment.

Some assets just don't react as well to prices as others. Stocks, for example, are notoriously unpredictable in the short term due to their high correlations with the overall stock market. Even then, the difference in performance between different securities in the same index can be minute. It's still possible to make a profit using this method of investing but bear in mind, passive trading requires a huge amount of patience and restraint.

The argument for day trading is that it's an efficient and cost-effective way to capture opportunities that are rare. Many opportunities in day trading can be found in the statistics of the market's daily movements. Trading volume on major exchanges is highest on days when new data is released.

Wrapping Up

If you’d like to enter a more active form of trading, consider the Tradier platform. We offer Commission-free stock and options trading, with no per contract fee, as well as giving you the freedom to choose your own trading platform and free API access to your account. Learn more here.


Market Report Quiet markets bring new highs
By Todd Horwitz on Aug 15, 2021 at 8:51:11 AM

Market Report Quiet markets bring new highs

By

 

Todd Horwitz Chief Strategist BubbaTrading.com

Be Prepared not Surprised.

Markets are in the heart of the dog days of summer. They are as quiet as it gets and making new highs. Although the Russel continues to struggle in the middle of a range. Dow, S+P and Nasdaq are at or on new highs.

The next couple of weeks should see the markets slow even more. As we approach the Labor Day Holiday there is no major news on the horizon except for the FED Meeting in Jackson Hole, Wyoming.

All expectations are that the FED will stay the course which could keep the rally rolling. The biggest problem appears to be the duration spreads and their relationship to the equity markets. They are the widest in 20 years.

Call buying remains on top of the option world with a collapsing VIX. Markets are starting to see some Put buying but Put selling outweighs the effect on volatility. Rounding out the top five are Bear calls and Bull put spreads.

Tech continues to dominate the rally with AAPL, TSLA, NVDA, DKNG and AMD leading the way. The bears are pushing on the SPY, TLT, GDXJ, GOLD and XLE. Basically, we are seeing Bonds and metals pressured.

As traders and investors, we have one thing to remember, follow the trend of the market. Be patient disciplined and leave your emotions out. The most important thing to remember is money management and self-control. 

Todd “Bubba” Horwitz

BubbaTrading.com


eDeltaPro to open access to their new platform!
By - Dan Raju, CEO at Tradier on Aug 9, 2021 at 4:30:17 PM

Great Platform. Great Community, Great Team and most importantly they want to make a difference for the Active Trader community - Dan Raju | CEO | Tradier

https://www.edeltapro.com/

Tradier-edeltapro-Dan-Raju


Market Report New Highs, Small Caps Joining the Party
By Todd Horwitz on Aug 8, 2021 at 2:08:45 PM

 Market Report New Highs, Small Caps Joining the Party

By

 

Todd Horwitz Chief Strategist BubbaTrading.com

Be Prepared not Surprised.

Apparently, there is nothing that can stop the bull market run. Good news is good bad news is better. This is the type of action we can expect with cheap money. The chase for yield will continue with the only asset class that provides any right now, equities.

We must also remember that we are in the dog days of summer which means low volume, small orders, and drifting markets. Lesson number one for all traders, never sell a dull market. Markets always have new money buyers flowing in from pension funds, IRA’s and other sources which makes dull markets dangerous for bears.

The options continue to point to a continuation of this never-ending rally will call buyers leading the way once again. The rest of the top five overall options strategies at Bull Puts, Bull Put Spreads and Bull Call Spreads. There has been some Put buying but not enough to pressure the markets.

Tech has taken over the bull market with QQQ, TSLA, QQQ, FB and AAPL leading the way. On the bear side we see action in AMAT, MRNA, PLUG, NKE and MU. Its summer and quiet, be patient enough to wait for your opportunity

As traders and investors, we have one thing to remember, follow the trend of the market. Be patient disciplined and leave your emotions out. The most important thing to remember is money management and self-control. 

Todd “Bubba” Horwitz

BubbaTrading.com


Bundling Execution: Capped by Ad-Supported and Paywall Model Limitations, Financial Content Creators are Monetizing their Retail Bases with an Emerging New Model
By - Dan Raju, CEO at Tradier on Aug 6, 2021 at 7:45:39 AM

    Content creators have anchored, inspired, and engaged over 15 million new U.S. retail investors to trade online in the last year, yet they are getting the raw end of the bargain. Creators and publishers deliver news, signals, analyses, perspectives, and education, doing a great job offering value to retail investors. It is with their efforts and success that I have seen retail investors being touted as a force to be reckon with in the financial markets.

   Despite this, publisher segments have been struggling to keep their revenue sources vibrant. Thanks to the changing behavior of online investors and pressures on traditional advertiser-supported (CPC/CPM/CPA), pay-wall subscription and affiliate-based revenue models, the insatiable appetite of online investors discovering value from free content has forced publishers to innovate a newer model. This is the model of “bundled execution.” Content creators are collaborating with brokerage API’s and bundling the capability of trading from within their own content, becoming a premium one-stop destination for both insights and action.

   Ad-supported models have been a source of revenue for content publishers and platforms for nearly two decades. Publishers frequently give away their content for free and rely on click-through and conversion-to-sales rates that advertisers pay as a source of revenue. While this is an easy way to get started and create revenues for content publishers, in most cases, it is non-sustainable as the primary revenue stream considering the vast amount of production costs and time involved to create engaging content. To generate any measurable revenue, publishers need to convince millions of users to access their content in an environment where most users find ads repulsive. This approach is heavily rigged to primarily create revenues for the search giants and ad platforms rather than the true value creators, the hard-working content publisher.


   Leveraging paywalls and selling subscriptions have also been the primary model of monetization for content publishers over the last decade, particularly for trade signal creators and newsletters. This model intends to create a consistent revenue stream and can easily be up-sold to an existing base. The downfall of this model is a high churn rate— with plenty of free content available, users tend to discontinue their subscriptions at alarming rates, diminishing subscription returns. This model also faces challenges of content piracy and redistribution. Publishers are often forced to spend large marketing dollars to keep up with the churn in addition to the already growing creation costs.

   Affiliate revenue channels have been available for over a decade but have only recently begun to be used in large part by publishers. This model pushes publishers to act as affiliate marketers for a third-party product where publishers receive a percentage, or a fixed fee referral, from key sales indicated by the third party. While it has the potential for higher returns on each conversion, it is an unpredictable revenue stream, forcing content publishers to abandon their core competency of creating compelling content. In many cases, it negatively affects the content publisher's ability to convert their users into their own paid customers.

   Despite the drawbacks, content publishers continue to adapt and innovate. At their core, they are "creators." Financial content creators have begun to find success through “bundled execution,” attracting additional subscribers, keeping churn rates low, and unlocking the ability to charge a higher subscription rate. Retail investors are in a perennial search for compelling analysis to drive their execution objectives. Publishers who create engaging and actionable content for retail investors are offering seamless trade executions through brokerage partnerships. This innovative approach has shown substantial benefits to small and mid-size publishers that struggle to tamp down churn and bring in enough subscription revenue. As these successes become more apparent, larger publishers are shifting to adopt this strategy.

   With the advent and wide-scale adoption of cloud technologies, APIs are making it possible to trade from any third-party platform, including content publishing venues. Content publishers work with execution venues and custodians to integrate the ability for a retail investor to not only consume content, but also act or initiate trades without ever leaving the publisher's website. Publishers can integrate this capability seamlessly with minimal technical lift or capital expenditure. Publishers are collaborating with brokerage firms who offer APIs and with heavily discounted or zero fees, provided customers have a subscription with the publishers.


This structure enables the publisher to become a "one-stop-shop" by offering exceptional content and the ability to act instantly and seamlessly. This creates a positive impact for the publisher that establishes a sticky customer relationship, emphasizes key differentiators for their content, and adds significant value proposition to their content-subscription offering. With traders boosting legacy ad and affiliate models, publishers are continuing to see improvements in churn rates by offering discounted per-trade or per-contract pricing through brokerage partners.


Market Report Sleepy Markets take a breather
By Todd Horwitz on Aug 1, 2021 at 6:23:17 AM

 Market Report Sleepy Markets take a breather

By

 

Todd Horwitz Chief Strategist BubbaTrading.com

Be Prepared not Surprised.

Markets made a fresh set of all time new highs last week but closed lower. The Russell which has been down trending managed to bounce. Overall, it was a sleepy, low volume market. We are in the dog days of summer, markets traded as expected.

The FOMC concluded their meeting Wednesday, basically staying the course. They have started to admit that inflation may be worse than they thought. We have written a couple of times that a big decision could come out of the Jackson Hole meeting.

Although Call buying continues to lead the way, some bearish strategies are moving to the top of the list. Put buying is number two with Bull Put spreads, Bear calls and spreads. Money still wants to go where its treated best and that is still equities.

Big tech kicked off their earnings last week with good numbers but little movement. TLT which is more of a safety moved to the top of the bullish symbols. Tech followed with AAPL, FB, AMD, and TSLA. ETFs led the bearish symbols, QQQ, IWM, XLE, FAS and SLV.

As traders and investors, we have one thing to remember, follow the trend of the market. Be patient disciplined and leave your emotions out. The most important thing to remember is money management and self-control. 

Todd “Bubba” Horwitz

BubbaTrading.com



© 2013 Tradier Inc. All rights reserved.
Blog powered by TypePad. Theme is Flatly. Member since Nov. 2013.