Hollywood to as an indicator to the upcoming BEAR!

Here is an interesting article corrolating Hollywood movies about the stock market and Big Bear drops.

Market Top III: Return of the Gecko by Dominick Mazza and Joe Nicholson. The corrolation is between when the market topped in 1987, in 2000 and right now we are possibly looking at a market top and when the movies Wall Street, Boiler Room and now the upcoming film Money Never Sleeps

It is one of those interesting analogies that probably has no corrolation whatso ever and is merely coincidence - well not coincidence because I really do not believe in coincidence but rather if you look at something then you may just find what you are looking for. Then again who ever came up with the idea of looking at movies vs the stock market???

I guess Kevin Bacon’s movie - “Quicksilver” in 1986 although not entirely about the stock market doesn’t count?

The best explanation is in the article about why this occurs -

Of course, big budget Hollywood producers and A-list celebrities don’t like to take big hedge-fund-style risks. When they invest years of work or $100 million in a project, they’re usually pretty sure there’s going to be an audience or they’d never get on board.

What this actually means is that Hollywood is late to the party. The stock market reaches new unexpected really high highs and starts making waves even with the people on the outside. The attention given makes for an audience to watch a film on the markets, but as we who follow the stock market know the noise just brings in the last of the buyers and once all the buyers are in that are going to get in the market then fails and drops like a stone.

So for me this is just another sign that the hype is almost over and the market will have a correction soon.

hollywood producers, money never sleeps, stock market, upcoming film

Making money using options

Isn’t it obvious that what we all want to do is make money using options?

I described in one of my last posts Credit Spreads, Iron Condors, Butterflys and Diagonal Spreads how I make money using options. However there are other opinions out there and definitely many more techniques.

Occasionally I will point out someone else in the blogosphere that really has a handle on how to trade options and today’s post is just about that… The Israeli Speculator is a blog that just started this February and he is very active in posting (I know I should be more active) and has a lot of good quality posts like this one - Five Option Trading Techniques You Can Use RIGHT NOW To Make Money He describes in a summary on the techniques that he would use right now to make money using options (you know like the title says). His choices are - The Box, Synthetic Position, Testing for a Trend, Butterfly Spread (Hmm that sounds familiar) and Delta Neutral.

These choices would fit well with the way I trade and has a conservative flare to the trading. And I really like his method of testing for a trend. He uses a statistical method for trend discovery, which he explains well here - How To Test For a Trend I prefer technical analysis not because it is EASY like he suggests but rather it is EASY to teach and for people to understand. Also it being a pseudo science can be correct as there is some art to it and that really gets to the heart of the matter. I like TA because it is an art and a science - it appeals to my doctor brain.

Another post he has that I found very informative - Who Makes Money in Wall-Street and How Check it out a very good article.

Overall a very well thought out, put together blog, with lots of good information. And since his name is Dan how can he go wrong!!!

Now you may ask yourself why is this guy promoting someone else’s blog? Good question and if you are asking yourself that you have not been reading my blog very long. The purpose of this blog is to give the beginner all the basics needed and all information available to learn everything they can about option trading. My preference obviously is Conservative Options but I feel you need to learn about all different type of methods and since I am not going to present anything but conservative methods, you need to check out other information.

conservative options, make money, option trading, trade options, trading techniques

Bear Call Credit Spread on X

Heres a credit spread on United States Steel (X) from Brent Archer with a good probability of success even though the stock is close to the sold spread and we would be betting against the trend - something I usually do not do.

Good resistance at 112, stochastics is coming down, MACD is starting to come down, X has never been above $115.

So the trade would be - Bull Call Spread - 115/120 for a credit of $1.10 or for a little less risk play with the ability to close the trade if X closes above 112 or 115 is the 120/125 for a credit of $.55

You would sell the June 115 strike for 2.10 and buy the June 120 strike for 1.00 or sell the June 120 for 1.00 and buy the June 125 for .45.

Heres Brent’s explanation - Blogging Stocks

bull call spread, credit spread, united states steel

Credit Spreads, Iron Condors, Butterflys and Diagonal Spreads

Credit Spreads, Iron Condors, Butterflys and Diagonal Spreads are the option strategies that I like to play and teach here at Conservative Options. Each one has a different purpose and once you learn when and how to use each strategy you will be ready to make money no matter what the situation. Here is a brief synopsis of when to use each trade…

Credit Spreads - a directional trade used when you have a fairly good idea that the stock or index is going to continue in a certain direction and not fall back to your sold option.

Iron Condors - a neutral trade using two credit spreads. It is used when a stock or the index is channelling and it is not likely to break either sold option but if it does you know you have at least one profitable credit spread.

Butterflys - You can use this when you have an idea that a stock is going to move into a certain range or do a short butterfly when you think a stock is going to move out of a certain range.

Diagonal Spread - probably the easiest of the conservative trades to understand, a directional bullish strategy used when you feel a stock is going to increase in value for the long term but at a slow pace, very simialr to a covered call only with more leverage.

We will go into more depth on each one - however if you want to learn about how I trade credit spreads right now check out my ebook - How to Trade Conservative Credit Spreads

butterflys, credit spreads, diagonal spreads, iron condors, option strategies

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