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  • Zelts,
    Normally, I sell credit spreads with a 50 delta, which is the same as ATM. Sometimes, like BIDU, as soon as I enter it pulls back, which makes it look like an ITM spread. My system is designed to take advantage of momentum, which is why I use Stochastic and MACD as keys to tell me when to enter. Lately, the market has whipsawed up and down and that has been disruptive for that strategy. That’s why I have been moving towards the cash indices (RUT, SPX, NDX) and 20 delta spreads.

    If you haven’t, you should watch the CSSv2 videos for a complete explanation: http://goo.gl/z46dRt

    Regarding assignment, that’s the beauty of the 50 delta trade: if you risk $100, then you risk is also $100, even if you get assigned. I’ve done a few videos on that subject – just do a search on ‘assignment’ on my YouTube channel.

    Happy Trading ◄Jeff►

  • Michele

    Jeff:

    For the price chart did you post anywhere the code for the OG-SMA(close,50,0) with the green/red indicators. And also the code for the white dotted line you have on your chart for price. I was going to try and write them myself but if you could direct me to them that would be great. I’ve been logging on with you every morning and it would help me since I have my charts set like yours.

    Thanks,

    Michele S.

    Henderson, NV

    • Michele,
      I hope you watched the CSSv2 videos. In the first video, I instruct the viewers to download the studies from my Downloads tab titled “Credit Spread System V2.0™ Studies”.
      Thanks for being a loyal follower.
      Happy Trading ◄Jeff►

  • Walt,

    I don’t use scans because I end up with underlyings that I am not familiar with. It’s just me, but I prefer a stable list of about 10-15 underlyings that I can become familiar with their patterns and success rate.

    As a matter of fact, on Monday I making a few changes to my A+ list. Be sure to watch.

    Happy Trading ◄Jeff►

  • Zelts Saltison

    Hello Jeff
    Last week NFLX traded near its a few year high (458), which it attempted to breakout and failed. I personally tend to believe that breakouts don’t pay as often (well, statistically) as pullbacks do. From a technical analysis standpoint, chances for breakout Friday last week did not look pretty for the stock – by looking at the daily chart one could note sort of a micro downtrend, and if there is any breakout coming our way, this would rather take a bit longer time to develop and should occur as a cross (through a 450 level) – test (the 450 area, from above) – up movement (above 450 level). I mean how many breakouts you have seen in your retail trading life? (my one is much smaller than yours anyway). Why I replicated (yes I did) the trade although technically I saw it as a lotto ticket? Just played a Friday lotto ticket with 2 days to expiration to see what I’ve known – I was not born to bet on breakouts, although there were small chances to capture little profit too.
    I also thinkbacked a rollout scenario with next (JUL1 14 with 5 days to expiration) weeklies, same BUP strikes, it would have been $20USD up per contract on the 27 and 28 June, which with the Friday NFLX close number and all technical odds would have made a bit more sense to hold. I did not roll out though, I’m not gonna make my bet on breakout, I’d like to wait for one to happen, then see it testing the level from above (and the level holding the test) and then go higher. Any way, thank you very much for everything you share.
    By the way, why didn’t you consider roll out ? or you did?

    • Wow, Zelts, that some comment! I agree that trading breakouts (gaps, either up or down – me definition) need to prove themselves before I get in. My rules say to wait a full Stochastic Cycle before consideration, which was there on NFLX with the exception of the little blip on 6/23. You win some and lose some.

      I don’t roll or adjust – never been able to make it work. To me, only throws more risk into an already losing trade. Of course, hind sight is 20/20 ad NFLX is now at 465.

      Happy Trading ◄Jeff►

      • Zelts Saltison

        seeing yesterday NFLX action makes me struggling again with my old bad ‘I-could-have-done-much-better’ attitude to my losing trades )))

        • It’s hard, but try to look at losers objectively and learn by mistakes – if it was a mistake. You know, sometimes price moves against us – it’s just the rules of the game. Playing the odds and momentum should give you a high winning percentage.
          Happy Trading ◄Jeff►

  • Troy Gundersen

    Hi Jeff,

    Great strategies! I recently found you online and wondered if you could point me to your video that describes the requirements for a 20 delta credit spread. Thanks!

    Troy

    • Troy,

      The 20 delta is almost the same as the CSSv2™ 50 delta trade. It uses the same indicators/studies but instead of a 50 delta (or ATM) strike, you select a strike around a 20 delta.

      On the Guru’s May 1 video (http://youtu.be/aJq1oNuzJv0) I elaborated on the 20 delta trade. Watch it and get back to me if you have more questions.

      Happy Trading
      ◄Jeff►

  • cspell

    Hi Jeff,
    I was wondering if you ever considered a debit spread when setting up your trades.
    for example, the recent bear alert on cvx, I was comparing the credit versus debit spread trades and it seemed that the debit spread was favorable by .02 cents, i guess not really a big deal but an edge is an edge.

    by the way, I’m in my second css trade with LNKD with the bear alert and it’s working nicely.
    sold 210/212.5 MAR1 weekly on 2/27 for 1.17 credit. At the time, the 210 was ITM which I think deviates from the plan but it gave me a decent risk/reward assuming the price was going to fall.
    With the close on friday i’m hoping I can let this expire worthless and collect the full credit. Right now i’m up $53 on a 1 lot. I plan on scaling up to the 10% of portfolio but am just getting more comfortable with the mechanics for now. I never really understood the saying “bulls make money, bears make money, pigs get slaughtered until I started trading options. I guess holding out for the full credit on this trade will make me a pig and i might get slaughtered 🙂
    Best,
    Chris

    • Chris,
      For the most part, its 6 of 1 or half dozen of another. I believe, because you are selling with a Credit Spread, you can get your mid-price, whereas buying a Debit Spread, you may need to go with the ‘natural’ (full) price. I have never attempted to prove this.

      Nice play on LNKD. If I had traded it, I would have picked the next day for expiration. I hope it holds on Monday.
      Happy Trading ◄Jeff►

  • cspell

    I entered my first cssv2 last friday on tsla, it looked strong despite not dipping to 20 on the stochastic, my first trade and i’m already breaking the rules :), I was going to get into cost too, but they have a dividend on 2/12 and was unsure about getting in

    • Congrats! Let’s just say you bent the rules, but my guess is its working out well. Did you take profit yet? The thing about COST is the dividend (0.31) will knock the price down. A strong mover will quickly recover, if it’s weak, probably not.
      ◄Jeff►

      • cspell

        Ok, bend sounds better. I sold the FEB2 180/177.50 Put spread for 1.10 and bought it back Monday for .30 , I figured I might as well lock in the gain although I hate leaving money on the table. I only had 1 contract on so after like 22 bucks in commission my profit is around .57 cents. I know staying small is wise while learning but do you plan on scaling up to higher lots at some point in your account? If I had done this trade as a 10 or 20 lot it would’ve got the blood flowing a bit more.

        I’m interested in seeing how you do in COST, I’m a little gun shy with earnings since i got assigned on a trade last year. It was a bit of a sleepless night given my account was in margin call 🙂

        • My account allocation rules are that I will never put more than 10% of my account at risk at any one time. Since my account is around $40,000, that means $4,000 risk-able. I could put that all into one trade, but I feel its better to diversify. So with around $250 at risk for each trade, that means I could have as many as 16 trades open. That will probably never happen, but it could. Of course, the story is much different if I had $400,000 to play with! That’s just a rule I go by.

          Regarding COST, I did get PUT the stock at dividend time. I’ll publish something in the future to explain what happened and how to handle it. It’s not a big deal – it’s no worse than taking max loss plus some extra transactions costs.

          ◄Jeff►

  • Suryo Bintoro

    Hello Jeff
    I found your video of weekly SPY ‘accidentally’ on youtube suggestion lists couple days ago, i’m really enjoy it and subscribe it right away. Excellent work Jeff, and quality of your video is great in every aspects, content, your teaching style and pace, voice quality are perfect for me. I’m not a native english speaker and i don’t have any trouble at all to understand your presentation. Again, big thanks

    Suryo

    • Thanks, Suryo and welcome to the team. Let me know if you have any questions.
      ◄Jeff►

  • Mahlen – The first indicator I look at is PPS, and then, as you said, I look at the 1-5 for confirmation. Thanks for asking. Happy Trading ◄Jeff►

  • David Jirak

    Really great daily scan updates and your YouTube “how to’s” like the 10am SPY, 5/10 Iron Condor, Double Calendars, etc… You really make them easy to understand and use.

    What indicator are you using for the dots? I know about the Parabolic but the version on TOS doesn’t change color with the direction.

    Thanks.

    • David – you will need to have you studies set up using my code. I explain how to do this in my videos titled “Charts and Analysis”. There are two videos in that play list. I’ll email you the thinkscript code.
      Happy Trading ◄Jeff►

      • yvonne

        Would you please send me the code also, I have the old ones loaded but not the latest dots. Thanks

        • Yvonne – I just emailed you the file.
          Happy Trading ◄Jeff►

  • James T,
    It simply and embed code for my YouTube Channel.
    ◄Jeff►

  • Michael Bobrofsky

    Good sound quality upgrade. Sounds richer.

    • Thanks Michael.
      Happy Trading ◄Jeff►