How to Swing Trade a Sloppy Market
Looking for an actionable swing trade game plan? Sami’s here with the ideas you need to start this week off right: In this video, you’ll see: The sloppiness and possible double top in QQQ Why you need to take things day-by-day When Sami goes against the trend The levels that need to hold in QQQ and SPY right now Why Sami is eyeing ACOR, AMRX, IOVA, WPG, XON, and other names The pattern that’s showing up in many of Sami’s long ideas So if you’re asking yourself “what should I buy or short this week?,” check out the video. Maybe you’ll like some of Sami’s list of names.
Continue Reading -->Options In Play – Taking the Long Road on GLD and SLV
It’s been a great couple months for the metals and they are now having a much needed rest. Positive signs are still indicating there should be more upside so we are sticking with the longer term swing ideas. If you like what you see, be sure to follow up for more daily options strategies with the Options In Play newsletter and the active trader education course for those looking to get started trading==>
Continue Reading -->Options In Play – Expectations And Option Pricing Ahead of the Fed Meeting
Expectations for rate movement are changing quickly and that could mean volatility at tomorrow’s FOMC meeting. I’ll talk about the shifting expectations and what the option market is pricing in on key stocks/ETF’s.
Continue Reading -->The Power of the 20 Day Moving Average
The 20 day moving average (20 period moving average, really) may be the most powerful trading amplifier in the universe. Learn to use this tool, and push the odds further in our favor. In this video, Sami explains: The difference between the 9, 20, 40, and 200 period moving averages What rising and falling moving averages mean How to know if a trend is sustainable Where retracements tend to halt When moving averages are more valuable So if you’re looking to improve your understanding of moving averages, this video is perfect for you!
Continue Reading -->F.A.A.N.G. & Friends: Your Favorite Stocks Analyzed (and Bitcoin too!)
Welcome to the latest edition of Sami’s popular new series F.A.A.N.G. and Friends — where he analyzes the most popular stocks in the market. In this video, Sami covers the following tickers: FB, AAPL, AMZN, NFLX, GOOG, BA, BTC, TWTR, NUAN, FNSR, IOVA, ALXN, OLLI, and ULTA But what you might find really interesting is his new take on Bitcoin… Next, check out this week’s latest swing trade game plan: Sami gives additional color on his Bitcoin opinion, and shares his views on QQQ, IWM, XLF, GLD, and SLV. Then, he jumped into the individual names he’s tracking this week, including AVP, KIRK, KMI, NTKR, TLRY, and XON.
Continue Reading -->Options in Play – Revisiting the Term Cumulative
I talk about “speculative” trade ideas in the nightly letters and it’s been a while since we went over what that means. RH is a recent trade idea that fell into this category, and presents a good opportunity to revisit the topic.
Continue Reading -->Fibonacci Retracements: Do They Work?
Many traders use Fibonacci-based retracement levels in their trading. But does it make sense to do so? Maybe not… In this video, Sami explains: Why he doesn’t use a precise 50% retracement level Why a 40-60% retracement level range makes more sense How these levels can set up various patterns, including double tops How Sami uses retracements to set up buys and sells Why he doesn’t like Fibonacci levels So if you’re tempted to use traditional Fibonacci replacement levels — watch this video first. Sami’s got a unique take you need to hear.
Continue Reading -->Why Trading Options at the Open Might Be a Bad Idea
Many stock traders love the opening action because of the heightened volatility. But what’s great for stocks is not necessarily good for options — especially at the open.But trading options just after the open can be a bad idea. Options are much less liquid in the first 15-20 minutes of trading, which means less liquidity and increased risk of trade slippage. While momentum stock traders may love the open, options traders should think twice before rushing to trade.Most news headlines (like earnings announcements, upgrades/downgrades) come out after the market closes or before the open. So the first few minutes of trading is the first time prices can adjust to the news.A stock will find a new trading range based on the news, so it’s common to see things move very quickly.That’s great for momentum stock traders looking for fast moves — but those wide ranges can cause problems for options traders. Options tend to lag stocks in terms of pricing and liquidity. This makes intuitive sense because the stock’s price is an input into the options price is right. After all, you can’t have an options price without a stock price!So if that stock is attempting to digest the news and find its new trading range, then the options can’t really get right. This means that the bid-ask spreads are typically wider, and the market makers are less likely to offer the liquidity simply because the stock price less less predictable. Option books are often slower to fill out, especially on lower volume/lower liquidity contracts.And wider spreads means a higher the chance of poor trade fills. Let’s look at a weekly options chain on Zoom (ZM) after it reported earnings:This is what it looked like at the open:This screenshot was taken in the first few minutes after the open following earnings. So it’s bound to be a volatile, busy day. You can see just how wide the spreads are.Look at the $93 calls. The bid is $3.70 and the ask is $6.50 for a spread of $2.80! That’s about a 50% difference, which is a massive spread for options that should actually be trading in the $4.50 – $5.00 range.Since the spread is so wide, there’s almost no volume. There’s a massive difference between getting selling at $3.70 and $4.50. Or getting in at $5 instead of $6.50. Now let’s look at the same options chain after the first 30 minutes:Look how much the bid-ask spreads have tightened.So it’s going to be way easier to get in and out, and there’s way less slippage. That means volume and liquidity go way up.What About Stocks With No News?Now, this is a stock that had news — earnings news.On a stock with no news, there’s going to be even less options volume around the open. So it could take even longer for price discovery to happen, meaning wider spreads and more slippage. This is why I’m patient with my options traders around the open. I want to see the books fill out, and I want the spreads to tighten. Otherwise, I’m at risk of overpaying when I buy, and getting less when I sell.P.S. Want my daily options trade ideas? Click here to learn about Options in Play.
Continue Reading -->Sami Abusaad Double Play: F.A.A.N.G. & Friends, Plus Swing Trading Game Plan
Welcome to the latest edition of F.A.N.G. & Friends: Your Favorite Stocks Analyzed! In this series, Sami Abusaad analyzes the hottest stocks in the market so you don’t have to. Today, you’ll find out: Why so many of the F.A.A.N.G. names are in the bullish column The problem with NFLX What Sam thinks of other hot names like ROKU, TWTR, WW, and YELP Whether gold could pull back even more Why SLV could be signalling a top Sami normally focuses on smaller, more volatile names, so take advantage of this unique opportunity to get his F.A.A.N.G. playbook. Next, get Sami’s swing trade game plan for this week, with the names he’s watching both long and short.
Continue Reading -->Interview With Pro Options Trader Dan Darrow
In our latest trader interview, we sat down with professional options trader Dan Darrow of Options in Play for a discussion on his unique options trading style. Tell us about yourself! I’m a professional options and equity trader based in California. I have been trading for a living since 2006, when I graduated from Fordman University. I use a “hybrid approach” and focus heavily on stocks with major news catalysts. I also use technical analysis and swing trading techniques for my options positions. I especially like to capitalize on earnings season, when we get volatile price swings. How did you first get involved with the markets? I first became interested in the markets (trading specifically) in college. Studying Finance put me on a head long path into trading. Trading fits my personality well. The markets are constantly evolving, and I love the excitement. How has your approach to options trading changed over time? When I first started trading back in 2006, I was equity only. I was focused on short-term momentum scalping, And I would get frustrated because I missed out on bigger multi-day/week moves. I began trading options a few years later to compensate for this. I focused on managing risk over longer time periods, and my strategy grew from there. And I’ve always been focused on catalyst-driven trades. When I moved to options, I adopted and improved the process How do you get over a big loss? I focus on the long-term picture. When I hit a bad stretch, I remind myself that it’s not permanent. I have 5 days a week, 20 days a month, and 12 months a year to make money. And if I come off a bad day, it’s only 17.5 hours to a potentially good day. A positive attitude goes a long way in this business. What is the one thing you wish you knew when you started as a trader? The importance of trade and money management. It’s one of the hardest things to learn, and it is critical to your success. Every trader should set parameters for their daily/monthly profit targets, trade and account stop losses, and risk-reward. Do you believe in setting specific stop loss and target prices?Do you have a certain risk management strategy for cutting losses? I absolutely believe in stop losses and targets. Like I said before, trade and money management is probably the biggest differentiating factor between a struggling trader and a successful one. When it comes to trading long options, I love the fact that your risk is the price paid. It’s almost like having risk management built into each trade. I still use stop losses, but it’s always good to know what your risk is. Are you concerned about high-frequency and algorithmic trading? They don’t concern me much when it comes to options. However, we do have to adjust our time frames a bit. Instead of only focusing on intraday and daily action, we need to look at extended rallies/drops over multiple days or weeks. What do you think about Bitcoin and other cryptocurrencies? Crypto currencies are interesting but I’m waiting for mass market applications. I’m waiting for the Microsoft (MSFT) or Apple (AAPL) of cryptos to bring them mainstream. What do you do in your free time away from trading? I love biking, music, and traveling, especially when I can do all three at once! It’s important to get away from the screens every so often to relax and recharge. If you weren’t a trader, what would you be doing with your life? Trading is all I ever wanted to do. I really haven’t thought about doing anything else since I graduated from college. I would like to open a coffee shop in a beach-side town at some point though. Many traders complain that there is too much information to deal with. How do you filter out the noise and figure out what’s important? To a certain extent, it helps to have tunnel vision. The constant headlines can make for some wild intraday moves, but since so much of my strategy revolves around earnings and events, I can really tune out the noise and just focus on the setups. What is one thing traders can do today to start getting better results? Come up with a game plan for the day and week. Not just for trade ideas, but also for P&L, targets, and stops. Think about it like a business. What do you want to accomplish today and this week? And how will you go about doing that? These are tough questions — but you have to answer them if you want to succeed. Are there any traders you look up to? I’m a sucker for the Market Wizards books by Jack Schwager, especially the original one. I read it when I first became interested in trading, and the lessons have stuck with me throughout my career. The insights from top guys like Paul Tudor Jones are amazing, and they’re as useful today as they were 30 years ago. What are your most successful “go-to” strategies? I love strangles on earnings and other events. I’m always on the hunt for “Earnings Combo trades”, which are trades that give you 2 moves for the price of 1. An earnings combo is when an event-driven move triggers a technical move. These can be real monsters and I typically use strangles on these setups. What are you most confident about in your trading? The process. I’ve done this for years and I know what works. It’s about staying disciplined, being selective, and having proper trade/money management techniques. Finally, Who Is Options in Play For? Options In Play is tailored to options traders looking for outside the box ideas. trader who is looking for outside the box ideas. As I said, I focus heavily on catalyst trades (earnings, major events). But I also like swing trades with a multi-week to multi-month time frame. Options in Play offers 2 new trade ideas per night, plus intraday
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