TRADING STRATEGIES

TradeWise offers defined-risk option spread trade recommendations through a variety of different trading strategies. Subscribe to one or more strategies for just $20 each per month and begin receiving initiating trades, adjustments and closing recommendations specific to that strategy. On average, TradeWise attempts to recommend at least 2 new trades per month for each strategy, but is dependent on favorable market conditions. Trade recommendations are delivered right to your email inbox. Subscribers may also set up Autotrade with TD Ameritrade to have the trades automatically entered for you in your designated TD Ameritrade account.

 

Consisting of two Vertical Spreads, the Iron Condor is designed to profit when the underlying remains in a reasonably narrow trading range.

The Iron Condor strategy typically involves the simultaneous sale of an out-of-the-money Call Vertical and an out-of-the-money Put Vertical, in the same month in the same underlying (see the Vertical Spread strategy description for additional information about Verticals). A call is out-of-the-money when the price of the underlying is lower than the option’s strike price. A put is out-of-the-money when the price of the underlying is higher than the put’s strike price. The underlying security is typically related to a well-known ETF or Index  such  as the SPY, SPX, IWM, DIA, DJX and QQQ.

The short Iron Condor strategy is designed to profit when the specified underlying remains in a reasonably narrow trading range during the expiration cycle. When looking for an Iron Condor to recommend, we are seeking a calculated probability of approximately 70-80% that the short Call Vertical and the short Put Vertical will not close in-the-money at options expiration. Only one side of the recommended trade can possibly close in- the-money since it is structured by means of a Vertical on the upside, and a Vertical on the downside.

TradeWise Iron Condor recommendations will typically involve collecting a credit upon initiation of the trade. The goal is to keep the credit collected upon initiation, which will occur if the underlying stays between the short Put Vertical strike price and short Call Vertical strike price. Depending on market movements and the time remaining to options expiration, TradeWise may recommend adjustments to the trade.

Often the recommended Iron Condor trades are designed to be market neutral, but depending on a number of factors there may be instances when TradeWise will skew the recommended trades slightly in one market direction or another. When that is the case, TradeWise will indicate these details in the trade recommendation sent to strategy subscribers. There may also be instances when TradeWise may purchase an Iron Condor if factors create an opportunity.

An allocation of $1000 is required for customers utilizing autotrade. There can be no assurance that any individual Iron Condor trade will be successful. 

 

The purchase of an Iron Condor may also be warranted if certain market conditions exist. 

The length of any specific trade recommendation in the Iron Condor strategy typically ranges from 20 to 70 days.

Multi-leg option strategies such as Iron Condors can entail substantial transaction costs, including multiple commissions, which may impact any potential return.

For additional information about this TradeWise service, please see the ADV Part II

Trade Advisory

April 2, 2018

 

TradeWise Strategy:   Iron Condor Advisory

Underlying:   S&P 500 Index (SPX)

Status:  Opening Trade

Trade:   SELL -1 IRON CONDOR SPX 100 18 MAY 18 2725/2730/2490/2485 CALL/PUT @2.10 LMT [TO OPEN/TO OPEN/TO OPEN/TO OPEN]

Trade Price:   $2.10 Credit  

Underlying Price:  $2595.26

Trade Risk:   $2.90

Trade Duration:  Medium Term

Buying Power Reduction:  $290.00

 

Trade Explanation:  For the Iron Condor Advisory in SPX, we are selling the 18 May 2725 Calls and 2490 Puts and buying the 2730 Calls and 2485 Puts for a net credit of $2.10 to open.

 

Price Action:  We are selling this five-point-wide Iron Condor in the S&P 500 Index in the 18 May monthly series. For an Iron Condor trade, we sell an out-of-the-money Call Vertical (2725/2730) and Put Vertical (2490/2485) simultaneously. SPX has seen extremely erratic movement in both directions as tech stocks have experienced a rapid decline. This Iron Condor strategy takes advantage of eventual consolidation between our short strikes as we expect the index to become somewhat range-bound  over the next 45 days. We need the index to remain between our break-even levels of $2487.90 on the downside and $2727.10 on the upside for the best results.

 

Volatility:  Volatility has risen this month as the VIX remains elevated near $23.  We typically look for high volatility scenario’s to initiate short Iron Condors as the position is short two verticals and if SPX continues to trade in a tight range, volatility should collapse quickly.

 

Probability: There is an 82% probability that SPX will be below the $2725 level and a 70% probability that it will stay above the $2490 level at 18 May expiration. This trade offers an attractive Risk/Reward scenario with the amount of credit collected vs. the probability numbers for this position with a $235 range between short strikes.

 

Risk: We are risking $2.90 to make a potential $2.10 on this Iron Condor. The position is risk-defined and any adjustments or closing trades will never increase our overall risk on the trade.

 

Trade Duration:  We have 45 days until 18 May Monthly expiration in this position. We typically initiate short Iron Condors in the 20-70 day range.

 

Logic:  The elevated volatility as of late makes this trading style a good environment for a neutral strategy.  We want to take advantage of this strategy without the necessity of picking a direction but still allowing time decay (Theta) to work in our favor with some moderate movement still permitted.  Our short verticals should lose value each day we stay in the trade if SPX remains safely between our short strikes to help contract the closing price of our Iron Condor.

 

We will continuously monitor all of the trades in the Iron Condor to determine the best time to adjust, close and initiate new positions. 

TradeWise

 

Original Trade Price:   $2.10 credit         

Closing/Adjustment Price:  

 

***If you are placing the trade yourself, you can now copy and paste the trade from this email directly from the ‘trade line’ above to the Thinkorswim trading platform. Just use the clipboard icon under the ‘Order entry’ tab; Make sure to adjust the quantity if necessary as the default above in the ‘Trade’ line is only a 1 lot***

 

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Trade Advisory

April 23, 2018

 

TradeWise Strategy:   Iron Condor Advisory

Underlying:   S&P 500 Index (SPX)

Status:  Closing 50% of the Iron Condor

Trade:   BUY +1 IRON CONDOR SPX 100 18 MAY 18 2725/2730/2490/2485 CALL/PUT @1.70 LMT [TO CLOSE/TO CLOSE/TO CLOSE/TO CLOSE]

Trade Price:   $1.70 Debit  

Underlying Price:  $2665.26

Trade Risk:   $1.25 remaining

Trade Duration:  Medium Term

Buying Power Reduction: N/A

 

Trade Explanation:  For the Iron Condor Advisory in SPX issued on April 2nd, we are buying 50% of the 18 May 2725 Calls and 2490 Puts and selling half of the 2730 Calls and 2485 Puts for a net debit of $1.70 to close.

 

We sold this five-point-wide Iron Condor in the S&P 500 Index in the 18 May monthly series for a $2.10 credit. For an Iron Condor trade, we sell an out-of-the-money Call Vertical (2725/2730) and Put Vertical (2490/2485) simultaneously. SPX had seen extremely erratic movement in both directions as tech stocks had experienced a rapid decline. This Iron Condor strategy seeked to take advantage of eventual consolidation between our short strikes as we expected the index to become somewhat range-bound over a period of 45 days. We needed the index to remain between our break-even levels of $2487.90 on the downside and $2727.10 on the upside for the best results.

 

SPX has climbed over $70 since we initiated the trade in early April.  This expanded the price of the iron condor, but the recent 3 day pullback has helped to lower its price as the underlying gets closer to our $2607.50 mid-point.  In light of the positive price action, we are going to close 50% of the iron condor for a $1.70 debit. This locks in a gain of $0.40 on half of the position while lowering our overall risk by 56%.  We will leave the balance of the position open, and look for SPX to move closer to $2607.50 to help lower our closing price on the balance with 24 days now remaining until 18 May expiration.

 

We will continuously monitor all of the trades in the Iron Condor to determine the best time to adjust, close and initiate new positions. 

TradeWise

 

Original Trade Price:   $2.10 credit         

Closing/Adjustment Price:  $1.70 debit to close 50% of the iron condor (Remaining risk = $1.25)

 

***If you are placing the trade yourself, you can now copy and paste the trade from this email directly from the ‘trade line’ above to the Thinkorswim trading platform. Just use the clipboard icon under the ‘Order entry’ tab; Make sure to adjust the quantity if necessary as the default above in the ‘Trade’ line is only a 1 lot***

 

 

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Trade Advisory

April 30, 2018

 

TradeWise Strategy:   Iron Condor Advisory

Underlying:   S&P 500 Index (SPX)

Status:  Closing the Iron Condor

Trade:   BUY +1 IRON CONDOR SPX 100 18 MAY 18 2725/2730/2490/2485 CALL/PUT @1.15 LMT [TO CLOSE/TO CLOSE/TO CLOSE/TO CLOSE]

Trade Price:   $1.15 Debit  

Underlying Price:  $2662.20

Trade Risk:   N/A

Trade Duration:  Medium Term

Buying Power Reduction: N/A

 

Trade Explanation:  For the Iron Condor Advisory in SPX issued on April 2nd, we are buying the remainder of the 18 May 2725 Calls and 2490 Puts and selling the balance of the 2730 Calls and 2485 Puts for a net debit of $1.15 to close.

 

We sold this five-point-wide Iron Condor in the S&P 500 Index in the 18 May monthly series for a $2.10 credit. For an Iron Condor trade, we sold an out-of-the-money Call Vertical (2725/2730) and Put Vertical (2490/2485) simultaneously. SPX had seen extremely erratic movement in both directions as tech stocks had experienced a rapid decline. This Iron Condor strategy seeked to take advantage of eventual consolidation between our short strikes as we expected the index to become somewhat range-bound over a period of 45 days. We needed the index to remain between our break-even levels of $2487.90 on the downside and $2727.10 on the upside for the best results.

 

SPX had climbed over $70 since we initiated the trade in early April.  This expanded the price of the iron condor, but a 3 day pullback helped to lower its price as the underlying got closer to our $2607.50 mid-point.  In light of the positive price action, we closed 50% of the iron condor for a $1.70 debit on the 23rd. This locked in a gain of $0.40 on half of the position while lowering our overall exposure by 56%.  After making a move lower after our adjustment, SPX has managed to arrive back near $2662.  With time decay working in our favor, the price of our iron condor has decreased by over 30% since the last adjustment.  With this favorable move, we are going to close the balance of the iron condor for a debit of $1.15.  This results in a net closing price of $1.425 and gain of $0.675 or 23% on the trade.

 

We will continuously monitor all of the trades in the Iron Condor to determine the best time to adjust, close and initiate new positions. 

TradeWise

 

Original Trade Price: $2.10 credit         

Closing/Adjustment Price:  $1.70 debit to close 50% of the iron condor; $1.15 debit to close (Net gain = $0.675)

 

***If you are placing the trade yourself, you can now copy and paste the trade from this email directly from the ‘trade line’ above to the Thinkorswim trading platform. Just use the clipboard icon under the ‘Order entry’ tab; Make sure to adjust the quantity if necessary as the default above in the ‘Trade’ line is only a 1 lot***

 

*Follow us on Twitter @TradeWise

 

 

 

 

Please note: All TradeWise Advisory emails are price sensitive. Therefore, all recommendations, unless otherwise noted, are applicable for 'DAY' orders only, not good-till-cancelled. If a recommendation cannot be filled, we may choose to resend the email the following day along with any modifications. In addition, if a recommendation can only be partially filled, clients may receive a pro rata allocation.


*****Options involve risk and are not suitable for all investors. Customers must consider all relevant risk factors including their own personal financial situation before trading. Every investor who uses options should read and understand the publication Characteristics and Risks of Standardized Options. A copy can be obtained from The Chicago Board Options Exchange (1-800-OPTIONS) or from your broker. The investor considering options should consult their tax advisor as to how taxes may affect the outcome of contemplated options transactions. A prospectus, which discusses the role of the Options Clearing Corporation, is also available without charge upon request at the Options Clearing Corporation, 440 S LaSalle St, Suite 908, Chicago, Illinois 60605.*****

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Note: You can always view all TradeWise content by logging onto the website at www.tradewise.com

All content ©2016 TradeWise| All rights reserved.

 

The most complex of the TradeWise Trading Strategies, the Double Double combines the use of Double Calendars, Double Diagonals and Straddle/Strangle Swaps to take advantage of market behavior.

The Double Double trade recommendations will involve options on highly liquid individual stocks, ETFs and Indices (such as the SPX, DJX or MNX) with medium correlation to market movements (beta). Because the Double Double is the most complex of the TradeWise strategies, it is important to have a clear understanding of all previous strategies listed in order to comprehend the nature of the Double Double.

An ideal market condition for this strategy would be one in which the underlying stock trades in a relatively narrow range during the time until options expiration.

A Double Calendar is the purchase of two Calendars, buying a Call Calendar above the strike price of the underlying and buying a Put Calendar below the strike price of the underlying. The Double Calendars recommendations will always involve paying a debit upon initiation of the recommended trade. As the front-month options that were sold decay and lose value, an opportunity will often be provided to buy back those front-month options for a lower price and sell a subsequent series, collecting a credit and therefore reducing the amount of risk on the trade. The desired result is to collect more credits than the original debit paid for the trade upon rolling and closing the Double Calendar.

Unlike the Double Calendar, in which the strike prices will be the same in both the front and back series, in the Double Diagonal the front-series strike prices will be different than the back-series strike prices. A Diagonal Spread combines a Calendar Spread, since the options expire at different times, and a Vertical Spread, since the strike prices are different. A Double Diagonal is simply two Diagonals. When the Diagonals are rolled, collecting a credit on each one, the resulting position will be an Iron Condor. At that point Tradewise will be looking for the same conditions as in the Iron Condor strategy (see Iron Condor strategy for additional information). The biggest difference between the Double Diagonal and the Iron Condor is that the Double Diagonal requires more buying power because of the make-up of the trade.

A Straddle/Strangle Swap is the sale of a front-month at-the-money call and an at-the-money put, which is known as a Straddle. This is coupled with the purchase of a back-month out-of-the-money call and an out-of-the-money put, which is known as a Strangle. The call and the put are typically the same number of strikes away from the price at which the underlying is trading. If the call is two strikes above that of the underlying, the put may be two strikes below the price of the underlying. The goal is for TradeWise to recommend that the client roll the positions for credits. When the two short options are rolled, the result is a short Put Vertical and a short Call Vertical at the same strike price on the short options.

An allocation of $1000  is required for customers utilizing autotrade. There can be no assurance that any individual Double Double trade will be successful.  

The length of any specific trade recommendation in the Double Double strategy typically ranges from 20 to 60 day.

Multi-leg option strategies such as the Double Double can entail substantial transaction costs, including multiple commissions, which may impact any potential return.

For additional information about this TradeWise service, please see the ADV Part II

Trade Advisory
March 23, 2018

TradeWise Strategy:   Double, Double Advisory
Underlying:   Select SPDR Energy Select ETF (XLE)
Status:  Opening Trade
Trade BUY +1 DBL DIAG XLE 100 20 APR 18/6 APR 18 70/66/70/66 CALL/PUT/CALL/PUT @.82 LMT [TO OPEN/TO OPEN/TO OPEN/TO OPEN]
Trade Price:   $0.82 Debit
Underlying Price:  $67.81
Trade Risk:   $0.82
Trade Duration:  Short Term
Buying Power Reduction:  $82.00 per spread

Trade Explanation: For the Double, Double Advisory in XLE, we are buying the 20 Apr 66 Puts and 70 Calls and selling the 6 Apr 66 Puts and 70 Calls for a Debit of $0.82 to open.

Price Action: We are buying this two-week-wide straight Double Calendar in the Energy sector tracking ETF for a debit of $0.82. This Double Calendar consists of a long out-of-the-money call calendar ($70 strike) and put calendar ($66 strike) around the current share price of the ETF ($67.85). We have a $4.00 wide range between the strikes in this position as we feel XLE will shift towards either strike over the next few weeks. A Double Calendar allows us not to have to pick a direction but relies on moves towards either strike and/or a rise in volatility.

Volatility:  Option Volatility has picked up as the equity market remains on edge. This gives us a good price entry point for long calendars as we expect volatility to potentially climb higher in our favor.  Any increase in volatility will expand the price of the position as it is a long Vega strategy. The short strikes are currently seeing  the same aggregate implied volatility (23%) as the 20 Apr cycle which makes the overall cost basis cheaper.  

Probability:  Double Calendars take advantage of the underlying trading at or near either strike in the trade. We have a reasonable range for the shares to trade which gives us a better probability of success if we have a move in the shares closer to either strike.

Risk:   We are risking our initiation price of $0.82 on this double calendar position. We will also have the opportunity to roll our short options into the 13 Apr Weekly cycle and then a closing trade. The roll could reduce risk and potentially increase profit on the position. Each individual week-wide double calendar roll has the potential to trade above $0.65 so we have a good risk/reward profile on the trade.  

Trade Duration:  We have 14 days to roll or close this trade at 6 Apr expiration and 28 days total in the position.

Logic: This Double calendar strategy is a good way to take advantage of a better volatility environment with the expectations that XLE shares will move closer to either strike over the next month. We expect the underlying to remain active after its recent slide from its highs of January. There is an additional 1-3% outside each side of the strikes where this position could still trade above our initiation price as multiple catalysts may help to move the value of Crude over the short-term.  

We will continuously monitor all of the positions in this advisory for the best time to adjust or close out of all positions.


TradeWise

Original Trade Price: $0.82 debit    
Closing/Adjustment Price:  

***If you are placing the trade yourself, you can now copy and paste the trade from this email directly from the ‘trade line’ above to the Thinkorswim trading platform. Just use the clipboard icon under the ‘Order entry’ tab; Make sure to adjust the quantity if necessary as the default in the ‘Trade’ line above is a 1 lot***

*Follow us on Twitter @TradeWise

PLEASE REMEMBER IF WE INITIATED THIS TRADE FOR YOU, WE WILL MANAGE AND CLOSE IT.  IF YOU WISH TO MANAGE THESE TRADES YOURSELF, YOU ABSOLUTELY MUST SEND AN EMAIL TO:  support@tradewise.com IN ORDER FOR THE TRADE NOT TO BE DUPLICATED!!

 

 

 

Trade Advisory
April 4, 2018

TradeWise Strategy:   Double, Double Advisory
Underlying:   Select SPDR Energy Select ETF (XLE)
Status:  Rolling Trade
TradeSELL -1 DBL DIAG XLE 100 (Weeklys) 13 APR 18/6 APR 18 70/66/70/66 CALL/PUT/CALL/PUT @.45 LMT [TO OPEN/TO OPEN/TO CLOSE/TO CLOSE]
Trade Price:   $0.45 Credit 
Underlying Price:  $66.52
Trade Risk:   $0.37 Remaining 
Trade Duration:  Short Term
Buying Power Reduction:  N/A

Trade Explanation: For the Double, Double Advisory in XLE issued on March 23rd, we are buying the 6 Apr 66 Puts and 70 Calls and selling the 13 Apr 66 Puts and 70 Calls for a Credit of $0.45 to roll.  

 

We bought this two-week-wide straight Double Calendar in the Energy sector tracking ETF for a debit of $0.82. This Double Calendar consisted of a long out-of-the-money call calendar ($70 strike) and put calendar ($66 strike) around the share price of the ETF ($67.85) at entry. We had a $4.00 wide range between the strikes in this position as we felt XLE could shift towards either strike over the next few weeks. A Double Calendar allowed us not to have a directional bias in energy, but simply relied on a move towards either strike and/or a rise in volatility.

Shares of XLE have nearly touched both strikes since the trade was introduced as the sector has reacted to various news. It is the perfect time to roll the short strikes with the underlying resting right on the $66 strike today.  A total credit generated of $0.45 will help to reduce exposure to $0.37 going forward which is a 55% improvement. Ideally, we will continue to see XLE gravitate closer to either strike over the course of the next 9 days to allow for the best possible exit.   

We will continuously monitor all of the positions in this advisory for the best time to adjust or close out of all positions.


TradeWise

Original Trade Price: $0.82 debit    
Closing/Adjustment Price:  $0.45 credit on 6 Apr/13 April roll (Remaining Risk= $0.37) 

***If you are placing the trade yourself, you can now copy and paste the trade from this email directly from the ‘trade line’ above to the Thinkorswim trading platform. Just use the clipboard icon under the ‘Order entry’ tab; Make sure to adjust the quantity if necessary as the default in the ‘Trade’ line above is a 1 lot***

*Follow us on Twitter @TradeWise

PLEASE REMEMBER IF WE INITIATED THIS TRADE FOR YOU, WE WILL MANAGE AND CLOSE IT.  IF YOU WISH TO MANAGE THESE TRADES YOURSELF, YOU ABSOLUTELY MUST SEND AN EMAIL TO:  support@tradewise.com IN ORDER FOR THE TRADE NOT TO BE DUPLICATED!!

 

 

Trade Advisory
April 10, 2018

TradeWise Strategy:   Double, Double Advisory
Underlying:   Select SPDR Energy Select ETF (XLE)
Status:  Closing Trade
TradeSELL -1 DBL DIAG XLE 100 20 APR 18/13 APR 18 70/66/70/66 CALL/PUT/CALL/PUT @.54 LMT [TO CLOSE/TO CLOSE/TO CLOSE/TO CLOSE]
Trade Price:   $0.54 Credit 
Underlying Price:  $70.10
Trade Risk:  N/A
Trade Duration:  Short Term
Buying Power Reduction:  N/A

Trade Explanation: For the Double, Double Advisory in XLE issued on March 23rd, we are buying the 13 Apr 66 Puts and 70 Calls and selling the 20 Apr 66 Puts and 70 Calls for a Credit of $0.54 to close.  

 

We bought this two-week-wide straight Double Calendar in the Energy sector tracking ETF for a debit of $0.82. This Double Calendar consisted of a long out-of-the-money call calendar ($70 strike) and put calendar ($66 strike) around the share price of the ETF ($67.85) at entry. We had a $4.00 wide range between the strikes in this position as we felt XLE could shift towards either strike over the next few weeks. A Double Calendar allowed us not to have a directional bias in energy, but simply relied on a move towards either strike and/or a rise in volatility.  Shares of XLE nearly touched both strikes early on in the trade as the sector reacted to various news. A perfect time to roll the short strikes into the 13 Apr series was presented on April 4th with the underlying resting right on the $66 strike. A total credit  of $0.45 helped to reduce exposure to $0.37 going forward which equated to a 55% improvement. 

 

Energy has begun to see strong momentum to the upside which has moved XLE within striking distance of the 70 calls.  We want to exit the position today for a strong $0.54 credit in order to lock in a solid gain while protecting against any movement away from ideal levels.  We were able to benefit off an early adjustment to reduce risk while still allowing for improved results on the remaining trade.  With a total of $0.99 collected overall, a gain of $0.17 or 21% will be realized over the course of the trade.  

We will continuously monitor all of the positions in this advisory for the best time to adjust or close out of all positions.


TradeWise

Original Trade Price: $0.82 debit    
Closing/Adjustment Price:  $0.45 credit on 6 Apr/13 April roll; $0.54 credit on 13 Apr/20 April closing trade (Total Credit Collected of $0.99 = $0.17 Gain) 

***If you are placing the trade yourself, you can now copy and paste the trade from this email directly from the ‘trade line’ above to the Thinkorswim trading platform. Just use the clipboard icon under the ‘Order entry’ tab; Make sure to adjust the quantity if necessary as the default in the ‘Trade’ line above is a 1 lot***

*Follow us on Twitter @TradeWise

PLEASE REMEMBER IF WE INITIATED THIS TRADE FOR YOU, WE WILL MANAGE AND CLOSE IT.  IF YOU WISH TO MANAGE THESE TRADES YOURSELF, YOU ABSOLUTELY MUST SEND AN EMAIL TO:  support@tradewise.com IN ORDER FOR THE TRADE NOT TO BE DUPLICATED!!

 

 

 

Please note: All TradeWise Advisory emails are price sensitive. Therefore, all recommendations, unless otherwise noted, are applicable for 'DAY' orders only, not good-till-cancelled. If a recommendation cannot be filled, we may choose to resend the email the following day along with any modifications. In addition, if a recommendation can only be partially filled, clients may receive a pro rata allocation.


*****Options involve risk and are not suitable for all investors. Customers must consider all relevant risk factors including their own personal financial situation before trading. Every investor who uses options should read and understand the publication Characteristics and Risks of Standardized Options. A copy can be obtained from The Chicago Board Options Exchange (1-800-OPTIONS) or from your broker. The investor considering options should consult their tax advisor as to how taxes may affect the outcome of contemplated options transactions. A prospectus, which discusses the role of the Options Clearing Corporation, is also available without charge upon request at the Options Clearing Corporation, 440 S LaSalle St, Suite 908, Chicago, Illinois 60605.*****

To unsubscribe from e-mails, please visit your Account Management page.

Note: You can always view all TradeWise content by logging onto the website at www.tradewise.com

All content ©2016 TradeWise| All rights reserved.

 

The Equity Calendar has the same construction as the Index Calendar, but typically utilizes large-cap Equities with anticipated low volatility rather than Indices.  
The Equity Calendar is based on the same methodology as the Index Calendar strategy but uses options on Equities rather than the major Indices used in the Index Calendar.

As with the Index Calendar, the structure of the Equity Calendar will always be selling the shorter-term option and purchasing the longer-term option. The trades that TradeWise recommends will always be initiated as a net debit, whether it is a Call Calendar or a Put Calendar. When recommending an Equity Calendar trade, TradeWise wants to see the underlying trading at or near the strike price of the option position. As option expiration nears, the short option will decay (lose premium) faster than the longer term option. This would ideally provide the opportunity to buy the short option back for less than it was sold and then sell the further-out option for a credit. The desired result is for the underlying to trade at or near the option strike price so the option positions can be rolled and more credits can be taken in to offset net debit that was paid to initiate the trade. TradeWise will monitor the recommended trade and will seek to make further recommendations to take advantage of such opportunities and/or suggest when to adjust or close the trade

An advantage of the Equity Calendar strategy is that the pool of individual stocks is very large. However, there is a possibility that some type of specific news event will cause the underlying stock to have a large move up or down. When recommending an Equity Calendar trade, TradeWise wants the market to remain in a narrow trading range and for the underlying not to have any big moves in either direction.

An allocation of $500 is required for customers utilizing autotrade in each recommended trade.There can be no assurance that an individual Equity Calendar trade will be successful.

The length of any specific trade recommendation in the Equity Calendar strategy typically ranges from 20 to 100 days.

Multi-leg option strategies such as Calendar Spreads can entail substantial transaction costs, including multiple commissions, which may impact any potential return.

For additional information about this TradeWise service, please see the ADV Part II

Trade Advisory

April 3, 2018

 

TradeWise Strategy:   Equity Calendar Advisory

Underlying:  ORACLE CORP (ORCL)

Status:  Opening Trade

Trade:   BUY +1 CALENDAR ORCL 100 18 MAY 18/20 APR 18 46 CALL @.50 LMT [TO OPEN/TO OPEN]

Trade Price:   $0.50 Debit

Underlying Price:  $44.85

Trade Risk:    $0.50

Trade Duration:  Short Term

Buying Power Reduction:  $500.00

 

Trade Explanation:    For the Equity Calendar Advisory in ORCL, we are selling the 20 Apr 46 Calls and buying the 18 May 46 calls for a debit of $0.50 to open.
 

Price Action: We are buying this 4-week-wide, slightly bullish, 46 Call calendar in the enterprise software company.  The shares have slumped since their last earnings result,  but they appear somewhat oversold here on a technical basis. We expect the stock to either consolidate or begin to reverse slightly higher over the short-term.

 

Volatility:  Volatility is below average in the stock and flat comparing both expiration cycles.  This gives us a good price level for entry into this calendar. Any increase in volatility would benefit the calendar as it is a long Vega strategy.

 

Probability:  Calendars take advantage of the underlying trading at or near the strike in the trade. We have a Probability of 72% that ORCL will touch our strike into 18 May expiration. This gives us plenty of time for Time Decay (Theta) to work in our favor as our short options lose value faster than our long calls.

 

Risk: We are risking our initiation price of $0.50 on this calendar position.  We have the opportunity to roll  the short strike 3X if we choose, along with a closing trade.  This will allow us to gradually reduce risk and potentially increase gains. We could always close the entire position at any point without adjusting the trade. Each weekly calendar roll has the potential to trade above $0.30 so we have a good risk/reward profile on the trade.  

 

Trade Duration:  We have 17 days to roll or close this calendar at 20 Apr expiration with 45 days total in the trade.

 

Logic:  With the shares perhaps bottoming over a short-term time frame, this calendar offers a positive risk/reward scenario. As we move closer to our short option expiration, the near-term options can quickly decay (theta) while our long month options should remain firm.  Again, this works best when ORCL trades near our $46 strike. Multiple Weekly options listed in the stock provide better flexibility to roll under the best available conditions.

 

We will continuously monitor our positions to determine if adjustments need to be made or when to close out of the trade.

TradeWise

 

Original Trade Price:   $0.50 debit          

Closing/Adjustment Price

 

***If you are placing the trade yourself, you can now copy and paste the trade from this email directly from the ‘trade line’ above to the Thinkorswim trading platform. Just use the clipboard icon under the ‘Order entry’ tab; Make sure to adjust the quantity if necessary as the default above in the Trade line in a 1 lot***

 

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Trade Advisory

April 10, 2018

 

TradeWise Strategy:   Equity Calendar Advisory

Underlying:  ORACLE CORP (ORCL)

Status:  Rolling Trade

Trade:   SELL -1 CALENDAR ORCL 100 (Weeklys) 4 MAY 18/20 APR 18 46 CALL @.34 LMT [TO OPEN/TO CLOSE]

Trade Price:   $0.34 Credit

Underlying Price:  $45.80

Trade Risk:    $0.16 remaining

Trade Duration:  Short Term

Buying Power Reduction:  N/A

 

Trade Explanation:    For the Equity Calendar Advisory initiated on April 3rd  in ORCL, we are selling the 4 May 46 Calls and buying the 20 Apr 46 calls for a credit of $0.34 to roll.
 

We bought  this 4-week-wide, slightly bullish, 46 Call calendar in the enterprise software company for a debit of $0.50. The shares had slumped since their last earnings result, but they appeared somewhat oversold on a technical basis. We expected the stock to either consolidate or begin to reverse slightly higher over the short-term.

 

We have seen ORCL gyrate in a $2 range over the past week.  With the shares moving closer to our $46 strike price in today's session, we are going to roll our short 20 Apr calls out 2 weeks to the 4 May series. We are skipping a week because of the lack of premium in the roll to 27 Apr in order to maximize the available credit.  Our overall risk has now been lowered to only $0.16 overall, with a roll and closing trade still available in order to reduce exposure further as the trade is shaping up nicely up to this point.

 

We will continuously monitor our positions to determine if adjustments need to be made or when to close out of the trade.

 

TradeWise

 

Original Trade Price:   $0.50 debit          

Closing/Adjustment Price: $0.34 credit for the 20 Apr/4 May roll (Remaining risk = $0.16)

 

***If you are placing the trade yourself, you can now copy and paste the trade from this email directly from the ‘trade line’ above to the Thinkorswim trading platform. Just use the clipboard icon under the ‘Order entry’ tab; Make sure to adjust the quantity if necessary as the default above in the Trade line in a 1 lot***

 

 

**Follow us on Twitter @tradewise

 

 

 

 

Trade Advisory

April 25, 2018

 

TradeWise Strategy:   Equity Calendar Advisory

Underlying:  ORACLE CORP (ORCL)

Status: Closing Trade

Trade:  SELL -1 CALENDAR ORCL 100 18 MAY 18/4 MAY 18 46 CALL @.32 LMT [TO CLOSE/TO CLOSE]

Trade Price:   $0.32 Credit

Underlying Price:  $45.50

Trade Risk:  N/A

Trade Duration:  Short Term

Buying Power Reduction:  N/A

 

Trade Explanation: For the Equity Calendar Advisory initiated on April 3rd in ORCL, we are buying the 4 May 46 Calls and selling the 18 May 46 calls for a credit of $0.32 to close.  

We bought  this 4-week-wide, slightly bullish, 46 Call calendar in the enterprise software company for a debit of $0.50. The shares had slumped since their last earnings result, but appeared somewhat oversold on a technical basis. We expected the stock to either consolidate or begin to reverse slightly higher over the short-term. We saw ORCL gyrate in a $2 range the first week of the trade.  With the shares moving closer to our $46 strike on the 10th, we chose to roll our short 20 Apr calls out an additional week to the 4 May series. We skipped a week because of the lack of premium in the roll into the 27 Apr series in order to maximize the available credit. Our overall risk was lowered to only $0.16 overall, with a potential roll and closing trade still available in order to reduce exposure further.

 

Shares of ORCL have continued to fixate on the $46 strike which is perfect price action.  We want to take advantage of ideal conditions to forego the next roll and simply close the position for a $0.32 credit to lock in a solid short-term gain on the trade. A total of $0.66 in credit was generated over the various adjustments which secures a $0.16 gain overall on the trade or 32% in three weeks. Earnings will ramp up substantially this week so taking pre-emptive action makes sense at this stage to prevent the underlying from fading away from ideal pricing.  

 

We will continuously monitor our positions to determine if adjustments need to be made or when to close out of the trade.

 

TradeWise

 

Original Trade Price:   $0.50 debit          

Closing/Adjustment Price: $0.34 credit for the 20 Apr/4 May roll; $0.32 credit for the 4 May/18 May Close (Total Credit of $0.66 = $0.16 Gain)

 

***If you are placing the trade yourself, you can now copy and paste the trade from this email directly from the ‘trade line’ above to the Thinkorswim trading platform. Just use the clipboard icon under the ‘Order entry’ tab; Make sure to adjust the quantity if necessary as the default above in the Trade line in a 1 lot***

 

 

**Follow us on Twitter @tradewise

Please note: All TradeWise Advisory emails are price sensitive. Therefore, all recommendations, unless otherwise noted, are applicable for 'DAY' orders only, not good-till-cancelled. If a recommendation cannot be filled, we may choose to resend the email the following day along with any modifications. In addition, if a recommendation can only be partially filled, clients may receive a pro rata allocation.


*****Options involve risk and are not suitable for all investors. Customers must consider all relevant risk factors including their own personal financial situation before trading. Every investor who uses options should read and understand the publication Characteristics and Risks of Standardized Options. A copy can be obtained from The Chicago Board Options Exchange (1-800-OPTIONS) or from your broker. The investor considering options should consult their tax advisor as to how taxes may affect the outcome of contemplated options transactions. A prospectus, which discusses the role of the Options Clearing Corporation, is also available without charge upon request at the Options Clearing Corporation, 440 S LaSalle St, Suite 908, Chicago, Illinois 60605.*****

To unsubscribe from e-mails, please visit your Account Management page.

Note: You can always view all TradeWise content by logging onto the website at www.tradewise.com

All content ©2016 TradeWise| All rights reserved.

 

The Index Calendar is a simple two-legged option spread, including the sale of a near-term option and the purchase of a longer term option, and is designed to benefit from the differences in the rates of time decay between shorter and longer term expiration cycles.

A Call Calendar spread is a single transaction, involving the simultaneous sale of a short term call option and the purchase of a longer term call option at the same strike price in the same underlying. A Put Calendar has the same structure, using puts rather than call options. Calendar spreads will always sell the shorter term option and buy the longer term option and each calendar spread recommended by TradeWise will be initiated for a net debit. This is true both for Call Calendars and Put Calendars.

The Index Calendar will recommend Calendar spreads on ETF's that track major Indices including: SPY, DIA and IWM, with high liquidity and medium correlation to various aspects of the market.

When recommending an Index Calendar trade, the goal is to see the underlying trading at or near the strike price of the option position. As options expiration gets closer, the short option will decay (lose premium) faster than the longer term option in the further-out cycle. This would ideally provide the opportunity to buy the short option back for less than it was sold and then sell the longer term option for a credit. The desired result is for the underlying to trade at or near the option strike price so the option positions can be rolled and more credits can be taken in than the net debit that was paid to initiate the trade. TradeWise will monitor the recommended trade and will seek to make further recommendations to take advantage of such opportunities and/or suggest when to adjust or close the trade.

An allocation of $500 or above per trade for this strategy should ensure but does not guarantee client participation in each recommended trade.

There can be no assurance that an individual Index Calendar trade will be successful.

The length of any specific trade recommendation in the Index Calendar strategy typically ranges from 20 to 100 days .

Multi-leg option strategies such as Calendar Spreads can entail substantial transaction costs, including multiple commissions, which may impact any potential return.

For additional information about this TradeWise service, please see the ADV Part II

Trade Advisory

March 28, 2018

 

TradeWise Strategy:   Index Calendar Advisory

Underlying:   iShares Russell 2000 ETF (IWM)

StatusOpening Trade

Trade:  BUY +1 CALENDAR IWM 100 (Weeklys) 4 MAY 18/13 APR 18 152.5 CALL @1.20 LMT [TO OPEN/TO OPEN]

Trade Price:   $1.20 Debit

Underlying Price:  $150.55

Trade Risk:    $1.20

Trade Duration:  Short/Med Term

Buying Power Reduction:  $120.00 per spread

 

Trade Explanation:  For the Index Calendar Advisory in IWM, we are buying the 4 May 152.5 Calls and selling the 13 Apr 152.5 Calls for a debit of $1.20 to open.

 

Price Action:  We are initiating this three-week-wide 13 Apr/4 May slightly upside 152.5 Call Calendar in the small cap ETF. IWM shares have tumbled from highs in concert with the overall market but economic conditions continue to demonstrate strength. This calendar strategy allows us to take advantage of the price action in a 2-3% range around $152.5 as we expect IWM to consolidate and grind slightly higher.    

 

Volatility:  Volatility has leveled off after peaking earlier in February. This provides a good price entry point for this type of strategy as any increase will help to expand the value of the spread considering the long Vega position.

 

Probability:  Calendars take advantage of the underlying trading at or near the strike in the trade.  There is a probability of 84% that IWM will touch our ideal $152.5 strike into 4 May expiration. This gives us plenty of time for Time Decay (Theta) to work in our favor as our short options lose value faster than our long calls. 

 

Risk:  We are risking our initiation price of $1.20 on this calendar position. We have 2 opportunities to roll our short options plus a closing trade. We could always close the entire position without adjusting the trade. Each Weekly roll has the potential to trade above $0.75 so we have a good risk/reward profile on the trade.   

 

Trade Duration:  We have 16 days to adjust or close this short-term trade at 13 Apr expiration and 37 days total in the position.

 

Logic: IWM shares have pulled back in dramatic fashion, but the current pricing appears to be holding up on a possible support level.  We want to initiate this new position to take advantage of any further rally as shares appear oversold under the current conditions. Earnings season will launch during this period which should also help to prop premiums for better roll values. 

 

We will continuously monitor this position to determine if adjustments need to be made or when to close out of the trade.

 

TradeWise

 

Original Trade Price: $1.20 debit 

Closing/Adjustment Price

 

***If you are placing the trade yourself, you can now copy and paste the trade from this email directly from the ‘trade line’ above to the Thinkorswim trading platform. Just use the clipboard icon under the ‘Order entry’ tab; Make sure to adjust the quantity if necessary as the default above is only a 1 lot in the Trade line***

 

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Trade Advisory

April 4, 2018

 

TradeWise Strategy:   Index Calendar Advisory

Underlying:   iShares Russell 2000 ETF (IWM)

StatusRolling Trade

Trade:  SELL -1 CALENDAR IWM 100 20 APR 18/13 APR 18 152.5 CALL @.54 LMT [TO OPEN/TO CLOSE]

Trade Price:   $0.54 Credit 

Underlying Price:  $151.97

Trade Risk:    $0.66 Remaining 

Trade Duration:  Short/Med Term

Buying Power Reduction:  N/A

 

Trade Explanation:  For the Index Calendar Advisory in IWM issued on March 28th, we are buying the 13 Apr 152.5 Calls and selling the 20 Apr 152.5 Calls for a Credit of $0.54 to roll.  

 

We initiated this three-week-wide 13 Apr/4 May slightly upside 152.5 Call Calendar in the small cap ETF at a cost of $1.20. IWM shares had tumbled from highs in concert with the overall market on trade concerns, but resilient economic conditions have still continued to demonstrate strength. This calendar strategy allowed us to take advantage of the price action in a 2-3% range around $152.5.  We expected IWM to begin to consolidate and eventually grind slightly higher which would perform best.    

 

Shares of IWM are finally seeing some strength with a 1% surge today after opening significantly weaker.  We want to take advantage of the underlying's pricing near $152 to roll the short 13 Apr series into the 20 Apr cycle for a positive $0.54 credit to reduce exposure to $0.66 going forward.  This equates to a 45% reduction with a roll and closing combination still available.  Continued trading near current levels will set up perfectly for additional action over the course of the next 16 days. 

  

We will continuously monitor this position to determine if adjustments need to be made or when to close out of the trade.

 

TradeWise

 

Original Trade Price: $1.20 debit 

Closing/Adjustment Price: $0.54 credit on 13 Apr/20 Apr roll (Remaining Risk= $0.66)  

 

***If you are placing the trade yourself, you can now copy and paste the trade from this email directly from the ‘trade line’ above to the Thinkorswim trading platform. Just use the clipboard icon under the ‘Order entry’ tab; Make sure to adjust the quantity if necessary as the default above is only a 1 lot in the Trade line***

 

 

*Follow us on Twitter @TradeWise

 

 

Trade Advisory

April 13, 2018

 

TradeWise Strategy:   Index Calendar Advisory

Underlying:   iShares Russell 2000 ETF (IWM)

StatusRolling Trade

Trade:   SELL -1 CALENDAR IWM 100 (Weeklys) 27 APR 18/20 APR 18 152.5 CALL @.54 LMT [TO OPEN/TO CLOSE]

Trade Price:   $0.54 Credit

Underlying Price:  $153.66

Trade Risk:    $0.12 Remaining

Trade Duration:  Short/Med Term

Buying Power Reduction:  N/A

 

Trade Explanation:    For the Index Calendar Advisory initiated on March 28th in IWM, we are buying our short 20 Apr 152.5 Calls and selling the 27 Apr Weekly 152.5 Calls for a credit of $0.54 to roll.

 

We initiated this three-week-wide 13 Apr/4 May slightly upside 152.5 Call Calendar in the small cap ETF for a $1.20 debit late last month. IWM shares had continued to underperform the overall market conditions, but began showing signs of strength. We previously rolled our short calls to the 20 Apr series on the 4th for a credit of $0.54 to reduce risk to just $0.66 as the shares were in a good spot near our strike.

    

Shares of IWM have moved higher this week but we are seeing a decent reversal today closer to our ideal strike price.  We want to take advantage of the price action to roll our short 20 Apr 152.5 calls into the 27 Apr Weekly series for a positive $0.54 credit.  This action reduces our risk to only $0.12 and leaves us with a closing trade. The calendar is working out well despite the recent rally away from our strike and we have reduced our risk by 90%.  Any further consolidation or slight move lower will set up perfectly when we close the trade over the next 14 days.

 

We will continuously monitor this position to determine if adjustments need to be made or when to close out of the trade.

TradeWise

 

Original Trade Price:   $1.20 debit          

Closing/Adjustment Price:  $0.54 Credit on 13 Apr/20 Apr roll; $0.54 Credit on 20 Apr/27 Apr roll (Remaining Risk= $0.12) 

 

***If you are placing the trade yourself, you can now copy and paste the trade from this email directly from the ‘trade line’ above to the Thinkorswim trading platform. Just use the clipboard icon under the ‘Order entry’ tab; Make sure to adjust the quantity if necessary as the default above is only a 1 lot in the Trade line***

 

 

*Follow us on Twitter @TradeWise

 

 

Trade Advisory

April 19, 2018

 

TradeWise Strategy:   Index Calendar Advisory

Underlying:   iShares Russell 2000 ETF (IWM)

StatusClosing Trade

Trade:   SELL -1 CALENDAR IWM 100 (Weeklys) 4 MAY 18/27 APR 18 152.5 CALL @.37 LMT [TO CLOSE/TO CLOSE]

Trade Price:   $0.37 Credit

Underlying Price:  $156.39

Trade Risk:    N/A

Trade Duration:  Short/Med Term

Buying Power Reduction:  N/A

 

Trade Explanation:    For the Index Calendar Advisory initiated on March 28th in IWM, we are buying our short 27 Apr Weekly 152.5 Calls and selling our long 4 May Weekly 152.5 Calls for a credit of $0.37 to close.

 

We initiated this three-week-wide 13 Apr/4 May slightly upside 152.5 Call Calendar in the small cap ETF for a $1.20 debit late last month. IWM shares had continued to underperform the overall market conditions, but began showing signs of strength. We previously rolled our short calls to the 20 Apr series on the 4th for a credit of $0.54 to reduce risk to just $0.66 as the shares were in a good spot near our strike.  We again rolled our short Calls to the 27 Apr Weekly series on the 13th for another $0.54 Credit to reduce risk to only $0.12. We were left long our original 4 May Weekly 152.5 Calls and short the same amount of 27 Apr Weekly 152.5 Calls.    

 

Shares of IWM had moved higher this week and hit above $158 just yesterday, which put our calendar deep in the money. With an overdue pullback today and our closing price expanding, we are closing the trade for a credit of $0.37 to lock in our profit and eliminate risk of another rally. We collected a total credit of $1.45, which results in a solid gain of $0.25. Despite the move away from our ideal $152.5 strike, we managed the trade well to a profit.

 

We will continuously monitor this position to determine if adjustments need to be made or when to close out of the trade.

TradeWise

 

Original Trade Price:   $1.20 debit          

Closing/Adjustment Price:  $0.54 Credit on 13 Apr/20 Apr roll; $0.54 Credit on 20 Apr/27 Apr roll; $0.37 Credit to close ($0.25 gain) 

 

***If you are placing the trade yourself, you can now copy and paste the trade from this email directly from the ‘trade line’ above to the Thinkorswim trading platform. Just use the clipboard icon under the ‘Order entry’ tab; Make sure to adjust the quantity if necessary as the default above is only a 1 lot in the Trade line***

 

 

*Follow us on Twitter @TradeWise

 

 

 

Please note: All TradeWise Advisory emails are price sensitive. Therefore, all recommendations, unless otherwise noted, are applicable for 'DAY' orders only, not good-till-cancelled. If a recommendation cannot be filled, we may choose to resend the email the following day along with any modifications. In addition, if a recommendation can only be partially filled, clients may receive a pro rata allocation.


*****Options involve risk and are not suitable for all investors. Customers must consider all relevant risk factors including their own personal financial situation before trading. Every investor who uses options should read and understand the publication Characteristics and Risks of Standardized Options. A copy can be obtained from The Chicago Board Options Exchange (1-800-OPTIONS) or from your broker. The investor considering options should consult their tax advisor as to how taxes may affect the outcome of contemplated options transactions. A prospectus, which discusses the role of the Options Clearing Corporation, is also available without charge upon request at the Options Clearing Corporation, 440 S LaSalle St, Suite 908, Chicago, Illinois 60605.*****

To unsubscribe from e-mails, please visit your Account Management page.

Note: You can always view all TradeWise content by logging onto the website at www.tradewise.com

All content ©2016 TradeWise| All rights reserved.

 

The Vertical Spread is a defined-risk directional option spread that looks to take advantage of slight market moves in one particular direction.

The Vertical Spread strategy makes trade recommendations using Vertical Call Spreads and Vertical Put Spreads in underlying securities, such as individual stocks, ETFs or Indices  with anticipated high liquidity and generally with moderate volatility. The spreads are termed Vertical because the options are on the same underlying in the same expiration month but at different strike prices.

A Call Vertical spread involves simultaneously buying one call option and selling another call option at a different strike price in the same underlying, in the same expiration month. A Put Vertical spread involves simultaneously buying a put option and selling another put option at a different strike price in the same underlying, in the same expiration month.

TradeWise will typically recommend selling out-of-the-money Call Verticals or out-of-the-money Put Verticals. Upon selling the Vertical, a credit will be collected. The goal of the strategy is for the underlying to remain within a narrow trading range so that the credit received upon initiation can be retained. There are three out of four market situations where this type of trade can be successful:

  1. If the underlying is moving sideways for a period of time,
  2. If the underlying is moving up and down within a small range and not going in one particular direction for an extended period of time, or
  3. If the underlying has a relatively large move but does not go over the short vertical strike price on the upside or downside, depending on the particular trade that TradeWise recommends.

On the other hand, selling a Call or Put Vertical will not be successful if the market has a relatively straight-line move in one direction over the short strike price without pulling back.

TradeWise may recommend Verticals with a bullish or bearish direction. Bullish Vertical Spread recommendations will use long Call Verticals or short Put Verticals. Bearish recommendations will use short Call Verticals or long Put Verticals. If TradeWise recommends buying a Call Vertical or a Put Vertical for a debit, we will be seeking a short term move by the underlying in the desired direction. Such a move would increase the value of the Vertical because the Vertical could be sold for a credit that is greater than the debit paid upon initiation of the recommended trade.

An allocation of $500 or above per trade for this strategy is required

There can be no assurance that an individual Vertical Spread trade will be successful.

The length of any specific trade recommendation in the Vertical Spreads strategy typically ranges from 20 to 45 days.

Multi-leg option strategies such as vertical spreads can entail substantial transaction costs, including multiple commissions, which may impact any potential return.

For additional information about this TradeWise service, please see the ADV Part II

Trade Advisory

March 26, 2018

 

**For our Autotrade Clients – We initiated a 50% allocation only on this trade due to the directional nature of the trade; If you would normally trade 10 spreads, you only received 5 on this position**

 

 

TradeWise Strategy:   Vertical Advisory

Underlying:   S&P 500 Index ETF (SPY)

Status:   Opening Trade

Trade:   SELL -1 VERTICAL SPY 100 20 APR 18 268/270 CALL @.60 LMT [TO OPEN/TO OPEN]

Trade Price:   $0.60 Credit

Underlying Price:   $260.41

Trade Risk:   $1.40

Trade Duration:  Short Term

Buying Power Reduction:  $140.00

 

Trade Explanation:  For the Vertical Advisory in SPY, we are selling the 20 Apr 268 Calls and buying the 270 Calls for a net credit of $0.60 to open a 50% allocation.

 

Price Action:  We are selling this neutral/bearish out-of-the-money 20 Apr 268/270 call vertical.  Shares have sold off sharply to close out this quarter but have recovered somewhat in today's 1% recovery. We expect SPY shares to continue trading in a range at or below our break-even of $268.60 on the upside.

 

Volatility:  Volatility has ramped up quickly which benefits the value of the spread. Time decay and any reversal in volatility should keep the vertical price from expanding too much.

 

Probability:   There is a 74% probability that our short $268 strike will be out of the money at 20 Apr expiration. This fits well within in our guideline of over 60% for short credit vertical positions. Time Decay (Theta) also works in our favor as our short vertical loses value over the life of the trade.

 

Risk:   We are risking $1.40 to make a potential $0.60 on this short vertical position. We profit in three out of four scenarios: if SPY trades lower, remains at current levels or even drifts higher but remains below our break-even level of $268.60 through expiration.  

 

Trade Duration:  We have 25 days to adjust or close this short-term trade at 20 Apr expiration.

 

Logic:  SPY shares and the overall market have reset recently after hitting all-time highs. We feel the current SPY levels may fail again with a general lack of direction as earnings wind down and Washington remains deadlocked with trade negotiations. We have a nice $8.00 cushion to the upside and if any bearish momentum picks back up, the vertical will contract in price quickly with the limited time-frame. We are utilizing only a 50% allocation due to the long-standing uptrend in the overall market and recent severe movement in both directions.  

 

We will continuously monitor all of the positions in this advisory for the best time to adjust or close out of all positions.

TradeWise

 

Original Trade Price:  $0.60 credit         

Closing/Adjustment Price:  

 

***If you are placing the trade yourself, you can now copy and paste the trade from this email directly from the ‘trade line’ above to the Thinkorswim trading platform. Just use the clipboard icon under the ‘Order entry’ tab; Make sure to adjust the quantity if necessary as the default in the ‘Trade’ line above is a 1 lot***

 

*Follow us on Twitter @tradewise

 

Trade Advisory

April 2, 2018

 

**For our Autotrade Clients – We initiated a 50% allocation only on this trade due to the directional nature of the trade; If you would normally trade 10 spreads, you only received 5 on this position**

 

 

TradeWise Strategy:   Vertical Advisory

Underlying:   S&P 500 Index ETF (SPY)

Status:   Closing 50% of Vertical

Trade:   BUY +1 VERTICAL SPY 100 20 APR 18 268/270 CALL @.40 LMT [TO CLOSE/TO CLOSE]

Trade Price:   $0.40 Debit

Underlying Price:   $258.20

Trade Risk:   $ 0.60 remaining

Trade Duration:  Short Term

Buying Power Reduction:  N/A

 

Trade Explanation:  For the Vertical Advisory initiated on March 26th  in SPY, we are buying 50% of our 20 Apr 268 Calls and selling half of our 270 Calls for a net debit of $0.40 to close.

 

We sold this neutral/bearish out-of-the-money 20 Apr 268/270 call vertical for a credit of $0.60 on a 50% allocation.  Shares had sold off sharply to close out the quarter but had recovered somewhat with a 1% recovery on the day of initiation. We expected SPY shares to continue trading in a range at or below our break-even of $268.60 on the upside.

 

After reaching a high of $266.77, SPY has been gradually moving lower with a sharp pullback of over 2% today.  In light of the favorable down move, we are going to close 50% of the vertical for a debit of $0.40.  This lowers our overall risk by 57% while locking in a gain of $0.20 on half of the position. The trade is beginning to work in our favor, and we will look for SPY to level off or move lower to help decrease our closing trade over the 18 days remaining until 20 April expiration.

 

We will continuously monitor all of the positions in this advisory for the best time to adjust or close out of all positions.

TradeWise

 

Original Trade Price:  $0.60 credit         

Closing/Adjustment Price:  $0.40 debit to close 50% of the vertical (Remaining risk = $0.60)

 

***If you are placing the trade yourself, you can now copy and paste the trade from this email directly from the ‘trade line’ above to the Thinkorswim trading platform. Just use the clipboard icon under the ‘Order entry’ tab; Make sure to adjust the quantity if necessary as the default in the ‘Trade’ line above is a 1 lot***

 

 

*Follow us on Twitter @tradewise

 

 

Trade Advisory

April 19, 2018

 

**For our Autotrade Clients – We initiated a 50% allocation only on this trade due to the directional nature of the trade; If you would normally trade 10 spreads, you only received 5 on this position**

 

 

TradeWise Strategy:   Vertical Advisory

Underlying:   S&P 500 Index ETF (SPY)

Status:   Closing remaining 50% of Vertical

Trade:   BUY +1 VERTICAL SPY 100 20 APR 18 268/270 CALL @.87 LMT [TO CLOSE/TO CLOSE]

Trade Price:   $0.87 Debit

Underlying Price:   $268.20

Trade Risk:   N/A

Trade Duration:  Short Term

Buying Power Reduction:  N/A

 

Trade Explanation:  For the Vertical Advisory initiated on March 26th  in SPY, we are buying the remaining 50% of our 20 Apr 268 Calls and selling the last half of our 270 Calls for a net debit of $0.87 to close.

 

We sold this neutral/bearish out-of-the-money 20 Apr 268/270 call vertical for a credit of $0.60 on a 50% allocation.  Shares had sold off sharply to close out the quarter but had recovered somewhat with a 1% rebound on the day of initiation. We expected SPY shares to continue trading in a range at or below our break-even of $268.60 on the upside. After reaching just $1 below the short strike, SPY moved lower with a sharp pullback of over 2% on April 2nd. In light of the favorable down move, we closed 50% of the vertical for a debit of $0.40.  This lowered our overall risk by 57% while locking in a gain of $0.20 on half of the position. Leaving half of the trade opened also allowed for better potential results on the balance.  

 

The underlying had rallied in excess of 4% since the last adjustment was made which extended through the entire call vertical. We finally saw a welcome break with a timely reversal just ahead of expiration tomorrow.  We are taking advantage of the better conditions to close the balance for an $0.87 debit to protect against any possible rebound.  An average closing price of $0.635 limits our loss to only $0.035 after half of the trade was near max value earlier this week.  The recent trend higher didn't allow for viable opportunities until now, but we took action when able, in order to mitigate the original $1.40 of exposure.  

 

We will continuously monitor all of the positions in this advisory for the best time to adjust or close out of all positions.

TradeWise

 

Original Trade Price:  $0.60 credit         

Closing/Adjustment Price:  $0.40 debit to close 50% of the vertical; $0.87 debit to close 50% of the vertical (Avg. Closing Price of $0.635 = $0.035 Loss)

 

***If you are placing the trade yourself, you can now copy and paste the trade from this email directly from the ‘trade line’ above to the Thinkorswim trading platform. Just use the clipboard icon under the ‘Order entry’ tab; Make sure to adjust the quantity if necessary as the default in the ‘Trade’ line above is a 1 lot***

 

 

*Follow us on Twitter @tradewise

Please note: All TradeWise Advisory emails are price sensitive. Therefore, all recommendations, unless otherwise noted, are applicable for 'DAY' orders only, not good-till-cancelled. If a recommendation cannot be filled, we may choose to resend the email the following day along with any modifications. In addition, if a recommendation can only be partially filled, clients may receive a pro rata allocation.


*****Options involve risk and are not suitable for all investors. Customers must consider all relevant risk factors including their own personal financial situation before trading. Every investor who uses options should read and understand the publication Characteristics and Risks of Standardized Options. A copy can be obtained from The Chicago Board Options Exchange (1-800-OPTIONS) or from your broker. The investor considering options should consult their tax advisor as to how taxes may affect the outcome of contemplated options transactions. A prospectus, which discusses the role of the Options Clearing Corporation, is also available without charge upon request at the Options Clearing Corporation, 440 S LaSalle St, Suite 908, Chicago, Illinois 60605.*****

To unsubscribe from e-mails, please visit your Account Management page.

Note: You can always view all TradeWise content by logging onto the website at www.tradewise.com

All content ©2016 TradeWise| All rights reserved.

 

The Collar, which is a covered call with a protective put, involves purchasing stock, selling a call on that stock and buying a protective put to define the overall risk

The Collar strategy employs the same strategy as a Covered Call by purchasing 100 shares of a large capitalization stock with high liquidity and then selling a call option on those 100 shares, collecting a credit. However, in addition to the Covered Call, the simultaneous purchase of a Protective Put defines the amount of risk in the overall position and guards against a large downward move in the price of the stock.

The Protective Put is typically about 10-20% out-of-the-money and its cost will typically be less than the credit received on the sale of the call. With the Protective Put in place, we are covering any downside move in the underlying below our protective Put.

The Collar strategy provides the opportunity to roll the options from month to month, thereby collecting additional premiums against the long stock position and reducing the cost and risk of each trade. This can work to the client’s benefit if it is anticipated that the underlying stock is going to continue to trade in a relatively narrow range. The client may also have the benefit of dividend payments on many of the stocks TradeWise recommends for this strategy.

In some cases, TradeWise may recommend a Collar with a call in a further-out month and a Protective Put in a month that is closer to options expiration. This can reduce the cost for the protection until the put expires. In the event a trade is initiated with the call and put in different months, it provides the opportunity to either close the trade or roll the long put. This will depend upon the pricing of the individual options and the price movement of the underlying stock over the time frame of the trade.

Typically the shares of stock purchased will be trading for less than $50 per share so for those who elect to Autotrade, an allocation of $5,000 should ensure participation in each recommended trade.

Of the various strategies recommended by TradeWise, the Collar entails the least risk but is the most capital intensive and there can still be no assurance that an individual collar trade will be successful.

The length of any specific Collar recommendation will typically be 20 to 180 days.

For additional information about this TradeWise service, please see the ADV Part II

Trade Advisory

March 23, 2018

 

TradeWise Strategy:   Collar Advisory

Underlying:   U.S. Steel Corp(X)

Status:   Opening Trade

Trade:   BUY +1 COLLAR X 100 18 MAY 18 37/33 CALL/PUT/X @34.75 LMT [TO OPEN/TO OPEN/TO OPEN]

Trade Price:   $34.75 Debit

Underlying Price:  $34.70

Trade Risk:    $1.75

Trade Duration:  Medium Term

Buying Power Reduction:  $3475.00

 

Trade Explanation:   For the Collar Advisory in U.S. Steel Corp., we are buying (X) stock, buying the 18 May 33 Puts and selling the 37 Calls for a net debit of $34.75 to open.

 

Price Action: To initiate a Collar, for every 100 shares of stock bought, sell 1 call option and buy 1 put option. For example: for each 100 shares of (X) bought, sell 1 contract of the 18 May 37 calls and buy 1 of the 33 puts. The total cost of the trade is the price paid for the stock and puts, minus the premium received for the calls.   X has pulled back on fears of the impact of the new U.S. Tariffs plan, after trading near $47 just 3 weeks ago.  The shares appear to be oversold and look to be finding support near the $34 level. 

 

Volatility: Volatility in X is moderate, just above its 1 year average.

 

Probability:  The stock has upside potential after pulling back with the overall market and the turmoil around tariffs. We expect it to retrace back towards the $37 level once some of the trade worries subside.

 

Risk:  We are risking $1.75 to make a potential $2.25, plus collect a potential $0.05 dividend on each individual collar.  Although the Buying Power reduction is high due to the stock, the long put acts as protection to the downside to limit risk. We will have an opportunity to roll the options from month to month but only if it reduces risk. Our initial break-even price is $34.75 on this position. 

 

Trade Duration:  We have 56 days to adjust or close this trade at 18 May expiration.

 

Logic:  We are buying the Collar to take advantage of the recent downturn and a near-term reversal in the steel giant.  An attractive entry point should provide a favorable opportunity for this strategy.  X has pulled back sharply, but today's recovery and oversold conditions make this trade more attractive.  We will be looking for the positive momentum to start influencing the shares higher as fears subside.

 

We will continuously monitor all of our positions to determine if adjustments need to be made or when to close out of a trade.

TradeWise

 

Opening Trade Price:   $34.75 Debit        

Closing/Adjustment Price

 

***If you are placing the trade yourself, you can now copy and paste the trade from this email directly from the ‘trade line’ above to the Thinkorswim trading platform. Just use the clipboard icon under the ‘Order entry’ tab; Make sure to adjust the quantity if necessary***

 

 

 

Trade Advisory

April 26, 2018

 

TradeWise Strategy:   Collar Advisory

Underlying:   U.S. Steel Corp(X)

Status:   Closing Trade

Trade:   SELL -1 COLLAR X 100 18 MAY 18 37/33 CALL/PUT/X @35.76 LMT [TO CLOSE/TO CLOSE/TO CLOSE]]

Trade Price:   $35.76 Credit

Underlying Price:  $37.85

Trade Risk:    N/A

Trade Duration:  Medium Term

Buying Power Reduction:  N/A

 

Trade Explanation:   For the Collar Advisory initiated on March 23rd  in U.S. Steel Corp., we are selling (X) stock, selling the 18 May 33 Puts and buying the 37 Calls for a net credit of $35.76 to close.

 

To initiate this Collar, for every 100 shares of stock bought,  we sold 1 call option and bought 1 put option for a debit of $34.75. For example: for each 100 shares of (X) bought, we sold 1 contract of the 18 May 37 calls and bought 1 of the 33 puts. The total cost of the trade is the price paid for the stock and puts, minus the premium received for the calls.  X had pulled back on fears of the impact of the new U.S. Tariffs plan, after trading near $47 just 3 weeks prior.  The shares appeared to be oversold and looked to be finding support near the $34 level. 

 

X has been on a steady march higher from when we initiated the trade just over a month ago with the stock trading near $34.70.  With the company releasing quarterly earnings today after the close, we prefer to close the trade for a $35.76 credit or a gain of $1.01.  We would rather close the trade with a nice 57% gain (based on our risk of $1.75),rather than risk an adverse earnings report with a market move of over $2.5 currently projected.

 

We will continuously monitor all of our positions to determine if adjustments need to be made or when to close out of a trade.

TradeWise

 

Opening Trade Price:  $34.75 Debit        

Closing/Adjustment Price: $35.76 Credit to close the collar (Net gain =$1.01)

 

***If you are placing the trade yourself, you can now copy and paste the trade from this email directly from the ‘trade line’ above to the Thinkorswim trading platform. Just use the clipboard icon under the ‘Order entry’ tab; Make sure to adjust the quantity if necessary***

 

Please note: All TradeWise Advisory emails are price sensitive. Therefore, all recommendations, unless otherwise noted, are applicable for 'DAY' orders only, not good-till-cancelled. If a recommendation cannot be filled, we may choose to resend the email the following day along with any modifications. In addition, if a recommendation can only be partially filled, clients may receive a pro rata allocation.


*****Options involve risk and are not suitable for all investors. Customers must consider all relevant risk factors including their own personal financial situation before trading. Every investor who uses options should read and understand the publication Characteristics and Risks of Standardized Options. A copy can be obtained from The Chicago Board Options Exchange (1-800-OPTIONS) or from your broker. The investor considering options should consult their tax advisor as to how taxes may affect the outcome of contemplated options transactions. A prospectus, which discusses the role of the Options Clearing Corporation, is also available without charge upon request at the Options Clearing Corporation, 440 S LaSalle St, Suite 908, Chicago, Illinois 60605.*****

To unsubscribe from e-mails, please visit your Account Management page.

Note: You can always view all TradeWise content by logging onto the website at www.tradewise.com

All content ©2016 TradeWise| All rights reserved.

 

The “Sector Index” strategy looks to take advantage of the rise and fall in volatility that may occur in various sectors of the market. We will recommend positions using various risk-defined strategies, such as Calendar Spreads, Iron Condors, Vertical Spreads and Double Diagonals and Butterflies.

For the underlying, we will recommend ETF's with high liquidity specific to certain sectors of the market, such as ones tied to gold, oil, or real estate.

An allocation of $500 per trade is the minimum allocation amount in order to Autotrade this strategy. There can be no assurance that an individual Sector Index trade will be successful.

The length of any specific trade recommendation in the Sector Index strategy typically ranges from 20 to 90 days.

Multi-leg option strategies can entail substantial transaction costs, including multiple commissions, which may impact any potential return.

For additional information about this TradeWise service, please see the ADV Part II

Trade Advisory

April 4, 2018

 

**For our Autotrade Clients, we initiated a 50% allocation only due to the product; If you would normally trade 10 spreads, you only received 5 on this trade**

 

TradeWise Strategy:   Sector Index Advisory

Underlying:   Select SPDR Financial Sector ETF (XLF)

Status:  Opening Trade– 50% Allocation

Trade:   BUY +1 VERTICAL XLF 100 (Weeklys) 27 APR 18 27/29 CALL @.77 LMT [TO OPEN/TO OPEN]

Trade Price:   $0.77 Debit

Underlying Price:  $27.25

Trade Risk:   $0.77

Trade Duration:  Short Term

Buying Power Reduction:  $77.00

 

Trade Explanation: For the Sector Index Advisory in XLF, we are buying the 27 Apr Weekly 27 Calls and selling the 29 calls for a debit of $0.77 to open with a 50% allocation.

 

Price Action:  We are buying this $2-wide bullish call vertical in the Financial Sector  ETF. The shares have sold off over the past two weeks, but look to be finding some support near its 200 day moving average.  XLF appears to be oversold and we feel the sector may begin to reverse higher into earnings. This gives us a good price point to buy this bullish call vertical.

 

Volatility:  Volatility in XLF is moderate.  We only need a slight up move to expand the closing price and any rise in volatility should also increase the value of our vertical.

 

Probability:  The long call in this vertical is currently in-the-money and we have over a 65% probability for the shares to trade back above the $27.77 break-even level over the next 23 days. We initiated a long vertical to take advantage of any short-term move higher to potentially reduce risk or close the trade.

 

Risk:   We are risking our initiation price of $0.77 to make a potential $1.23 on this vertical, which is a good risk/reward scenario on a directional trade.

 

Trade Duration: We have 23 days to adjust or close this trade at 27 Apr expiration.

 

Logic:  We are buying the vertical as a directional play based on a perceived reversal in the sector. We will be aggressive in closing a portion or all of the trade if we see a significant move in the shares in either direction. Buying the vertical makes more sense because there is little premium and poor probabilities in selling any bullish put vertical.  We expect upcoming earnings to be overall positive as rising interest rates should help to drive results higher. 

 

We will continuously monitor all of the positions in this advisory for the best time to adjust or close out of all positions.

TradeWise

 

Original Trade Price: $0.77 debit          

Closing/Adjustment Price:

 

***If you are placing the trade yourself, you can now copy and paste the trade from this email directly from the ‘trade line’ above to the Thinkorswim trading platform. Just use the clipboard icon under the ‘Order entry’ tab; Make sure to adjust the quantity if necessary as the default above in the ‘Trade’ line is only a 1 lot***

 

**Follow us on Twitter@tradewise

 

Trade Advisory

April 5, 2018

 

**For our Autotrade Clients, we initiated a 50% allocation only due to the product; If you would normally trade 10 spreads, you only received 5 on this trade**

 

TradeWise Strategy:   Sector Index Advisory

Underlying:   Select SPDR Financial Sector ETF (XLF)

Status:  Closing 50% of Vertical

Trade:   SELL -1 VERTICAL XLF 100 (Weeklys) 27 APR 18 27/29 CALL @1.05 LMT [TO CLOSE/TO CLOSE]

Trade Price:   $1.05 Credit

Underlying Price:  $27.76

Trade Risk:   $0.245 remaining

Trade Duration:  Short Term

Buying Power Reduction:  N/A

 

Trade Explanation: For the Sector Index Advisory initiated on April 4th in XLF, we are selling 50% of the 27 Apr Weekly 27 Calls and buying half of the 29 calls for a credit of $1.05 to close.

 

We bought this $2-wide bullish call vertical in the Financial Sector  ETF for $0.77 just yesterday. The shares had sold off over the past two weeks, but looked to be finding some support near its 200 day moving average.  XLF appeared to be reaching oversold levels and we felt the sector may begin to reverse higher into earnings. This gave us a good price point to buy this bullish call vertical.

 

Today, we are seeing further follow-through to the upside in XLF after yesterday’s late bullish reversal. In light of the positive price action, we are closing 50% of the vertical for a solid credit of $1.05. This locks in a gain of $0.28 on half of the position and lowers our overall risk to only $0.245 overall. We will look for XLF to continue moving higher to help expand the price of our closing trade with 22 days still remaining to expiration.

 

We will continuously monitor all of the positions in this advisory for the best time to adjust or close out of all positions.

 

TradeWise

 

Original Trade Price: $0.77 debit          

Closing/Adjustment Price:  $1.05 Credit to close 50% of the vertical (Remaining risk = $0.245)

 

***If you are placing the trade yourself, you can now copy and paste the trade from this email directly from the ‘trade line’ above to the Thinkorswim trading platform. Just use the clipboard icon under the ‘Order entry’ tab; Make sure to adjust the quantity if necessary as the default above in the ‘Trade’ line is only a 1 lot***

 

**Follow us on Twitter@tradewise

 

 

Trade Advisory

April 10, 2018

 

**For our Autotrade Clients, we initiated a 50% allocation only due to the product; If you would normally trade 10 spreads, you only received 5 on this trade**

 

TradeWise Strategy:   Sector Index Advisory

Underlying:   Select SPDR Financial Sector ETF (XLF)

Status:  Closing remaining 50% of Vertical

Trade:  SELL -1 VERTICAL XLF 100 (Weeklys) 27 APR 18 27/29 CALL @1.00 LMT [TO CLOSE/TO CLOSE]

Trade Price:   $1.00 Credit

Underlying Price:  $27.80

Trade Risk:   N/A

Trade Duration:  Short Term

Buying Power Reduction:  N/A

 

Trade Explanation: For the Sector Index Advisory initiated on April 4th in XLF, we are selling the balance of the 27 Apr Weekly 27 Calls and buying the remainder of the 29 calls for a credit of $1.00 to close.

 

We bought this $2-wide bullish call vertical in the Financial Sector ETF for $0.77. The shares had sold off over the past two weeks, but looked to be finding some support near its 200 day moving average. XLF appeared to be reaching oversold levels and we felt the sector should begin to reverse higher into earnings. This gave us a good price point to buy this bullish call vertical. We saw further follow-through to the upside in XLF on April 5th, the day after we initiated the trade. In light of the positive price action, we closed 50% of the vertical for a solid credit of $1.05. This locked in a gain of $0.28 on half of the position and lowers our overall risk to only $0.245 overall.

 

We have seen XLF pull back after our adjustment, but today the shares are back on the rise prompting us to close the balance of the vertical for a $1.00 credit. We want to be prudent and finish out the trade with a nice gain, rather than hold the position going into earnings season for some of the larger banks. The trade ends up being a gain of $0.255 or 33% on our original 50% allocation. 

 

We will continuously monitor all of the positions in this advisory for the best time to adjust or close out of all positions.

 

TradeWise

 

Original Trade Price: $0.77 debit          

Closing/Adjustment Price:  $1.05 Credit to close 50% of the vertical; $1.00 Credit to close the balance of the vertical (Net gain= $0.255)

 

***If you are placing the trade yourself, you can now copy and paste the trade from this email directly from the ‘trade line’ above to the Thinkorswim trading platform. Just use the clipboard icon under the ‘Order entry’ tab; Make sure to adjust the quantity if necessary as the default above in the ‘Trade’ line is only a 1 lot***

 

**Follow us on Twitter@tradewise

 

Please note: All TradeWise Advisory emails are price sensitive. Therefore, all recommendations, unless otherwise noted, are applicable for 'DAY' orders only, not good-till-cancelled. If a recommendation cannot be filled, we may choose to resend the email the following day along with any modifications. In addition, if a recommendation can only be partially filled, clients may receive a pro rata allocation.


*****Options involve risk and are not suitable for all investors. Customers must consider all relevant risk factors including their own personal financial situation before trading. Every investor who uses options should read and understand the publication Characteristics and Risks of Standardized Options. A copy can be obtained from The Chicago Board Options Exchange (1-800-OPTIONS) or from your broker. The investor considering options should consult their tax advisor as to how taxes may affect the outcome of contemplated options transactions. A prospectus, which discusses the role of the Options Clearing Corporation, is also available without charge upon request at the Options Clearing Corporation, 440 S LaSalle St, Suite 908, Chicago, Illinois 60605.*****

To unsubscribe from e-mails, please visit your Account Management page.

Note: You can always view all TradeWise content by logging onto the website at www.tradewise.com

All content ©2016 TradeWise| All rights reserved.

 

Weeklys are options that trade for a one-week timeframe. Much like the Sector Index, TradeWise Weeklys will use a variety of TradeWise Trading Strategies to offer clients innovative ways to participate in news-driven market moves and short-term trading strategies. Because of the short-term nature of this product, Weeklys allow more opportunity to trade on market events such as earnings reports, news and regulatory events, as well as in market-neutral environments.

Weeklys are listed in multiple series around Monthly Standard option cycles. No Weeklys are listed that would expire during the expiration week for standard options (the third Friday of the month). Due to the shorter timeframe to expiration, Weeklys may have lower premium costs than standard options. They tend to be highly liquid and only issued on underlying securities that generally have high volume and tight markets. As with any option, there is no guarantee of a secondary market.

When trading Weeklys, TradeWise will use the following strategies: Buying or Selling Vertical Spreads, Buying Index Calendars, Buying Equity Calendars, Buying Double Doubles, Buying Butterflies and Buying or Selling Iron Condors. The strategy implemented by TradeWise on any particular trade will depend on many variables such as the underlying, beta, volatility, timelines and events. TradeWise will be looking for news-based events for directional trades or high volatility for market-neutral positions. TradeWise generally looks for high volatility underlyings so that there is the opportunity to sell short-term options that decay at a very fast pace due to the shorter time frame to expiration. Any recommendations related to large-cap stocks will typically be related to the periods of their earnings announcements.

The same criteria will be followed for all the TradeWise strategies, but while the various TradeWise strategies trade standard options, TradeWise Weeklys will focus on weekly options in Equities, ETFs and Indices. The frequency of TradeWise Weekly trade recommendations will often be similar to the other TradeWise strategies; however, due to specific market events such as earnings season, the frequency of Weeklys trade recommendations may fluctuate from time to time.

Please note that Weeklys are most appropriate for experienced option traders. TradeWise clients using Weeklys must be extremely attentive to their positions as changes to underlying prices and days to expiration will have a larger impact on the option due to the shorter time frame. Clients must consider all relevant risk factors, including their own personal financial situation, before trading. To learn more about the risks associated with each strategy, please see the trade email or reference the strategy descriptions found in the ADV Part II.

An allocation of $1000 for this strategy is required for autotrade, but does not guarantee an individual Weeklys trade will be successful.

The length of any specific TradeWise Weeklys trade recommendation typically ranges from 1-60 days.

Multi-leg option strategies can entail substantial transaction costs, including multiple commissions, which may impact any potential return.

For additional information about this TradeWise service, please see the ADV Part II

Trade Advisory

May 3, 2018

 

**For our Autotrade Clients, we initiated a 50% allocation only due to the directional nature of the position; If you would normally trade 10 spreads, you only received 5 on this trade**

 

TradeWise Strategy:   Weeklys Advisory

Underlying:  Alibaba Group (BABA)

Status:  Opening Trade – 50% allocation

Trade:  SELL -1 IRON CONDOR BABA 100 (Weeklys) 11 MAY 18 192.5/195/172.5/170 CALL/PUT @0.95 LMT [TO OPEN/TO OPEN/TO OPEN/TO OPEN]

Trade Price:   $0.95 Credit

Underlying Price:  $182.55

Trade Risk:    $1.55

Trade Duration:  Short Term

Buying Power Reduction:  $155.00

 

Trade Explanation:  For the Weeklys Advisory in BABA, we are selling the 11 May Weekly 192.5 Calls and 172.5 Puts and buying the 11 May Weekly 195 Calls and 170 Puts for a $0.95 Credit to open on a 50% allocation.

 

Price Action:  We are selling this $2.5-wide Iron Condor in the e-commerce company for a credit of $0.95 ahead of earnings. For an Iron Condor trade, we sell an out-of-the-money Call Vertical (190/192.5) and Put Vertical (172.5/170) simultaneously. Shares of BABA have been in a channeling pattern over the past few months with a general lack of direction in the overall market. Near term option pricing is elevated beyond the expected move of +/- $7.5, which allows us to take advantage of expanded premium levels by selling an Iron Condor. We need the shares to continue to trade safely between our break-even levels of $171.55 on the downside and $193.45 on the upside for the best results.  

 

Volatility: Volatility is rising today with continued pressure on the tech sector which generates more credit on our short out-of-the-money verticals. Volatility should revert lower if we stabilize at current levels or BABA reverses higher.

 

Probability:  There is a 77% probability that BABA shares will be below the $192.5 level and a nearly equal 78% probability that it will be above the $172.5 level at 11 May expiration. This trade offers a good Risk/Reward scenario with the amount of credit collected vs. the probability numbers for this position considering the $20 distance between the short strikes.

 

Risk:  We are risking $1.55 to make a potential $0.95 on this Iron Condor utilizing a 50% allocation. The position is risk-defined and any adjustments or closing trades never increase the overall risk on the trade.

 

Trade Duration:  We only have 8 days to adjust or close this short-term trade at 11 May expiration.

 

Logic:  We want to take advantage of the increased volatility in the options to initiate this trade ahead of a key quarterly earnings result. The move will ideally remain muted between our short verticals and we will be aggressive in closing at least a portion of the trade if the price decreases by 25% or more. We are only utilizing a 50% allocation due to the inherent event risk ahead of earnings and the 67% current implied volatility rank.  

 

We will continuously monitor all of our positions to determine if adjustments need to be made or when to close out of the trade. 

TradeWise

 

Original Trade Price: $0.95 credit       

Closing/Adjustment Price

 

***If you are placing the trade yourself, you can now copy and paste the trade from this email directly from the ‘trade line’ above to the Thinkorswim trading platform. Just use the clipboard icon under the ‘Order entry’ tab; Make sure to adjust the quantity if necessary as the default in the ‘Trade’ line above is only a 1 lot***

 

*Follow us on Twitter @TradeWise

 

 

 

 

Trade Advisory

May 4, 2018

 

**For our Autotrade Clients, we initiated a 50% allocation only due to the directional nature of the position; If you would normally trade 10 spreads, you only received 5 on this trade**

 

TradeWise Strategy:  Weeklys Advisory

Underlying:  Alibaba Group (BABA)

Status:  Closing Trade – 50% allocation

Trade:  BUY +1 IRON CONDOR BABA 100 (Weeklys) 11 MAY 18 192.5/195/172.5/170 CALL/PUT @.50 LMT [TO CLOSE/TO CLOSE/TO CLOSE/TO CLOSE]

Trade Price:   $0.50 Debit

Underlying Price:  $181.51

Trade Risk:   N/A

Trade Duration:  Short Term

Buying Power Reduction:  N/A

 

Trade Explanation:  For the Weeklys Advisory in BABA issued yesterday, we are buying the 11 May Weekly 192.5 Calls and 172.5 Puts and selling the 11 May Weekly 195 Calls and 170 Puts for a $0.50 debit to close. 

 

We sold this $2.5-wide Iron Condor in the e-commerce company for a credit of $0.95 ahead of earnings. For an Iron Condor trade, we sold an out-of-the-money Call Vertical (190/192.5) and Put Vertical (172.5/170) simultaneously. Shares of BABA had been in a channeling pattern over the past few months with a general lack of direction in the overall market. Near term option pricing was elevated beyond the expected move of +/- $7.5, which allowed us to take advantage of expanded premium levels by selling an Iron Condor. We needed the shares to continue to trade safely between our break-even levels of $171.55 on the downside and $193.45 on the upside for the best results.  

 

Shares of BABA initially showed strength pre-market before coming back near the mid-point of the Iron Condor.  We want to take advantage of ideal conditions to exit the position today for a $0.50 debit as the short term volatility has collapsed. This action seals a gain of $0.45 on the original 50% allocation while protecting against continued erratic movement in the overall market.  We feel making 47% of the max gain at this stage makes sense with the current conditions remaining uncertain.   

 

We will continuously monitor all of our positions to determine if adjustments need to be made or when to close out of the trade. 

 

TradeWise

 

Original Trade Price: $0.95 credit       

Closing/Adjustment Price: $0.50 debit to close Iron Condor  (Realized Gain of $0.45)

 

***If you are placing the trade yourself, you can now copy and paste the trade from this email directly from the ‘trade line’ above to the Thinkorswim trading platform. Just use the clipboard icon under the ‘Order entry’ tab; Make sure to adjust the quantity if necessary as the default in the ‘Trade’ line above is only a 1 lot***

 

 

*Follow us on Twitter @TradeWise

Please note: All TradeWise Advisory emails are price sensitive. Therefore, all recommendations, unless otherwise noted, are applicable for 'DAY' orders only, not good-till-cancelled. If a recommendation cannot be filled, we may choose to resend the email the following day along with any modifications. In addition, if a recommendation can only be partially filled, clients may receive a pro rata allocation.


*****Options involve risk and are not suitable for all investors. Customers must consider all relevant risk factors including their own personal financial situation before trading. Every investor who uses options should read and understand the publication Characteristics and Risks of Standardized Options. A copy can be obtained from The Chicago Board Options Exchange (1-800-OPTIONS) or from your broker. The investor considering options should consult their tax advisor as to how taxes may affect the outcome of contemplated options transactions. A prospectus, which discusses the role of the Options Clearing Corporation, is also available without charge upon request at the Options Clearing Corporation, 440 S LaSalle St, Suite 908, Chicago, Illinois 60605.*****

To unsubscribe from e-mails, please visit your Account Management page.

Note: You can always view all TradeWise content by logging onto the website at www.tradewise.com

All content ©2016 TradeWise| All rights reserved.

 

The Covered Call strategy consists of purchasing 100 shares of a large capitalization stock, ETF or index-based ETF ("underlying") and then selling one call option on each 100 shares for a credit.

The Covered Call strategy is designed to profit in two different scenarios. Upon selling a call, the credit received effectively reduces the cost of the trade, thus reducing the overall amount of money risked on the trade. If the price of the underlying moves above the strike price of the call, the client will likely be assigned and will be obligated to sell the underlying at the strike price at expiration. This will result in a profit, as the client will keep the profit realized from selling the underlying at a higher price than was initially paid, as well as the initial credit received for selling the call (less any applicable commissions and assignment fees).

If the price of the underlying trades in a relatively narrow trading range and stays below the strike price, the strategy provides an opportunity to roll the call option from month to month (buying back the short call and then selling a further-out month call), thereby collecting additional premium each month and further reducing the amount of money risked on the trade. The client may also have the benefit of receiving dividend payments on many of the stocks TradeWise recommends for this strategy. Of course, this is only possible if the client remains in the position and does not get assigned.

The Covered Call strategy may be utilized when an investor believes the underlying will either move up or remain in a relatively narrow trading range over the life of the call option. There is limited upside potential for this strategy, up to the strike price of the call. If the stock moves above the strike price of the call, the client likely will not keep the underlying shares as they will be called away and is obligated to sell theunderlying at the strike price as described above. Also, the strategy does not provide downside protection beyond the credit received when the call was sold, should the underlying lose significant value. In the event the underlying experiences a large down move of more than a 25% drop in price, TradeWise may send out a recommendation to close out of the trade. For Autotrade clients, TradeWise will attempt to close out the trade.

Typically the shares of the underlying purchased will be trading for less than $50 per share so for those who elect to autotrade, an allocation of $5,000 should ensure participation in each recommended trade.

This strategy is capital intensive and there can be no assurance that an individual covered call trade will be successful. As with any other strategy, any adjustments or rolling of the position will incur applicable commission fees.

The length of any specific Covered Call recommendation will typically at least 30 days.

For additional information about this TradeWise service, please see the ADV Part II

Trade Advisory

May 3, 2018

 

TradeWise Strategy:   Covered Call Advisory

Underlying:  AIG International Group (AIG)

Status:  Opening Trade

Trade:  BUY +1 COVERED AIG 100 15 JUN 18 52.5 CALL/AIG @49.59 LMT [TO OPEN/TO OPEN]

Trade Price:   $49.59 Debit

Underlying Price:  $50.18

Trade Risk: $49.59

Trade Duration:  Long Term

Buying Power Reduction:  $4959.00

 

Trade Explanation:   For Covered Call Advisory in AIG, we are buying (AIG) stock and selling the 15 June 52.5 Calls for a net debit of $49.59 to open.

Price Action:  To initiate this Covered call position, we buy 100 shares of the underlying equity (AIG) and sell 1 contract of the 15 June 52.5 calls for a net debit of $49.59.  Our total cost on the trade is the price we paid for the stock minus the premium received for the calls on this trade.  AIG shares have tumbled over 8% off a mixed quarterly result. We expect the shares to eventually reverse higher as the entire financial sector appears oversold at this stage.  

 

Volatility:  Volatility is improving in AIG, which increases the credit received on the short Calls.  Any further increase in volatility should provide good opportunities to roll our short 15 June 52.5 calls to further-term months for additional credits to reduce risk.

 

Probability:  We are giving ourselves a positive probability for the shares to turn higher.  We have a cushion of over 1.25% to the downside before we reach our break-even.

 

Risk:   We are risking our initiation price of $49.59 on this position. We will have multiple opportunities to roll our short calls from month to month which will decrease this risk. The company pays a consistent quarterly dividend of $0.32 or 2.5%, which will help reduce risk and potentially increase profitability over time. 

 

Trade DurationWe have 43 days to adjust or close this trade by 15 June expiration. 

 

Logic:   We are buying the Covered Call to take advantage of the sharp pullback in shares after their quarterly earnings result.  Financials have taken a recent hit which we feel may be overdone at this stage.  AIG also looks to me holding above a multi year support level.   A healthy dividend yield combination makes the trade attractive as a longer term holding in order to gradually reduce exposure from the original $49.59. 

 

We will continuously monitor our positions to determine if adjustments need to be made or when to close out of the trade.

 

TradeWise

 

Original Trade Price:   $49.59 debit         

Closing/Adjustment Price:

 

***If you are placing the trade yourself, you can now copy and paste the trade from this email directly from the ‘trade line’ above to the Thinkorswim trading platform. Just use the clipboard icon under the ‘Order entry’ tab; Make sure to adjust the quantity if necessary as the default in the Trade line above is set at a 1 lot***

 

*Follow us on Twitter @TradeWise

Please note: All TradeWise Advisory emails are price sensitive. Therefore, all recommendations, unless otherwise noted, are applicable for 'DAY' orders only, not good-till-cancelled. If a recommendation cannot be filled, we may choose to resend the email the following day along with any modifications. In addition, if a recommendation can only be partially filled, clients may receive a pro rata allocation.


*****Options involve risk and are not suitable for all investors. Customers must consider all relevant risk factors including their own personal financial situation before trading. Every investor who uses options should read and understand the publication Characteristics and Risks of Standardized Options. A copy can be obtained from The Chicago Board Options Exchange (1-800-OPTIONS) or from your broker. The investor considering options should consult their tax advisor as to how taxes may affect the outcome of contemplated options transactions. A prospectus, which discusses the role of the Options Clearing Corporation, is also available without charge upon request at the Options Clearing Corporation, 440 S LaSalle St, Suite 908, Chicago, Illinois 60605.*****

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All content ©2016 TradeWise| All rights reserved.

 

The Volatility Strategy will use a variety of TradeWise Strategies. We aim to take advantage of this product by offering clients a way to participate in event-driven markets and short-term volatility trading strategies. Because of the event-driven nature, the Volatility Strategy will allow clients the opportunity to trade many different option strategies in a short-term time frame in all market sectors.

The Volatility Strategy is most appropriate for experienced option traders. TradeWise clients using this strategy must be extremely attentive to their positions as changes to underlying prices and days to expiration will have a larger impact due to the shorter time frame.

 

We will use monthly, quarterly and Weekly option cycles when trading the Volatility Strategy. We generally look for short-term opportunities of approximately 1-60 days in this strategy. 

 

An allocation of $2500 for this strategy is required for autotrade, but does not guarantee an individual Volatility trade will be successful.

 

We will use the following strategies: buying or selling Vertical Spreads, buying Index Calendars, buying Equity Calendars, buying Double Doubles, buying or selling Butterflies* (see description below) and buying or selling Iron Condors. As with regular options, there may also be opportunities to trade Weekly options. The strategy implemented by TradeWise on any particular trade will depend on many variables such as the underlying, beta, volatility, timelines and events. The same risks will apply to the trade recommendations in the TradeWise Volatility strategy as detailed in the descriptions of the individual strategies within the ADV Part 2. Each trade recommendation that we make will define the strategy that is being used, as well as outline details on the various dynamics of the individual trade.

 

For the underlying, we will recommend options in equities, ETFs and Indices.

 

For additional information about this TradeWise service, please see the ADV Part II

Trade Advisory

May 2, 2018

 

**For our Autotrade Clients, we initiated a 50% allocation only due to earnings; If you would normally trade 10 spreads, you only received 5 on this trade**

 

Tradewise Strategy:  Volatility Advisory

Underlying: Tesla Motors (TSLA)

Status:  Opening Trade - 50% allocation

Trade:   SELL -1 VERTICAL TSLA 100 (Weeklys) 11 MAY 18 322.5/325 CALL @.70 LMT [TO OPEN/TO OPEN]

Trade Price:  $0.70 Credit

Underlying Price:  $302.60

Trade Risk:  $1.80

Trade Duration: Short Term

Buying Power Reduction: $180.00

 

Trade ExplanationFor the Volatility Advisory in TSLA, we are selling the 11 May 322.5 Calls and buying the 325 Calls for a credit of $0.70 to open on a 50% allocation.

 

Price Action:  We are selling this neutral/bearish $2.5-wide out-of-the-money call vertical in the electric car maker at a 50% allocation. The shares have rallied sharply coming into earnings being reported after the close, and look to be facing a strong resistance level just overhead. We believe TSLA will begin to fail near the current level with further production delays recently announced.  We have a cushion of 6.5% to the upside before TSLA reaches our break-even of $323.20.

 

Volatility: Volatility has contracted in the overall market but TSLA is holding firm with an IV Rank still near 60%. This allows us to collect more premium and move the out-of-the-money call vertical higher.

 

Probability:   There is a 74% probability that our short $322.5 strike will be out of the money at 11 May expiration with more than a $20 cushion. This fits in our guideline of over 60% for short credit vertical positions. Time Decay (Theta) also works in our favor as our short vertical loses value over the life of the trade.

 

Risk:   We are risking $1.80 to make a potential $0.70 on this short vertical position with only 50% of a normal allocation amount. We profit in three out of four scenarios: if TSLA trades lower, remains at current levels or trades higher but remains below our break-even level at expiration.

 

Trade Duration:  We have 9 days to adjust or close this trade at 11 May expiration.

 

Logic:  The recent rally in the shares gives us a great opportunity to short the stock using a vertical spread with defined risk. We have good probabilities for the amount of credit collected vs. the risk in the trade. We feel that TSLA will continue to face headwinds with capital concerns and production delays. Any further assembly trouble could act as a catalyst for more concern. We will be aggressive to take action on any severe move in either direction due to the nature of the underlying and short time-frame with the trade.  

 

We will continuously monitor our positions to determine if adjustments need to be made or when to close out of the trade.

TradeWise

 

Original Trade Price: $0.70 credit       

Closing/Adjustment Price:  

 

***If you are placing the trade yourself, you can now copy and paste the trade from this email directly from the trade line to the thinkorswim trading platform. Just use the clipboard icon under the ‘Order entry’ tab; Make sure to adjust the quantity if necessary as the default in the ‘Trade’ line above is only a 1 lot***

 

*Follow us on Twitter @tradewise

 

 

Trade Advisory

May 3, 2018

 

**For our Autotrade Clients, we initiated a 50% allocation only due to earnings; If you would normally trade 10 spreads, you only received 5 on this trade**

 

Tradewise Strategy:  Volatility Advisory

Underlying: Tesla Motors (TSLA)

Status ClosingTrade - 50% allocation

Trade:   BUY +1 VERTICAL TSLA 100 (Weeklys) 11 MAY 18 322.5/325 CALL @.10 LMT [TO CLOSE/TO CLOSE]

Trade Price:  $0.10 Debit 

Underlying Price:  $280.24

Trade Risk:  N/A

Trade Duration: Short Term

Buying Power Reduction: N/A

 

Trade ExplanationFor the Volatility Advisory issued for TSLA yesterday, we are buying the 11 May 322.5 Calls and selling the 325 Calls for a debit of $0.10 to close.  

 

We sold this neutral/bearish $2.5-wide out-of-the-money call vertical for a $0.70 credit in the electric car maker at a 50% allocation. The shares had rallied sharply coming into earnings being reported after the close, and looked to be facing a strong resistance level just overhead. We believed TSLA would begin to fail near the current level with further production delays recently announced.  We had a cushion of 6.5% to the upside before TSLA reached our break-even of $323.20.

 

Shares of TSLA are under heavy pressure this morning as doubts over the companies lofty production promises have taken a toll with a 6% drop. We want to exit the entire position for a $0.10 debit to lock in a solid short term gain of $0.60 on the original 50% allocation. We prefer taking 86% of the max profit without needing to maintain the position for an additional 8 days to protect against any type of recovery. Overall the trade yields a return of 33.3% in less than 24 hours as the sharp downward move was ideal for the setup.  

 

 We will continuously monitor our positions to determine if adjustments need to be made or when to close out of the trade.

TradeWise

 

Original Trade Price: $0.70 credit       

Closing/Adjustment Price: $0.10 debit to close vertical (Resulting Gain= $0.60 on a 50% allocation) 

 

***If you are placing the trade yourself, you can now copy and paste the trade from this email directly from the trade line to the thinkorswim trading platform. Just use the clipboard icon under the ‘Order entry’ tab; Make sure to adjust the quantity if necessary as the default in the ‘Trade’ line above is only a 1 lot***

 

*Follow us on Twitter @tradewise

Please note: All TradeWise Advisory emails are price sensitive. Therefore, all recommendations, unless otherwise noted, are applicable for 'DAY' orders only, not good-till-cancelled. If a recommendation cannot be filled, we may choose to resend the email the following day along with any modifications. In addition, if a recommendation can only be partially filled, clients may receive a pro rata allocation.


*****Options involve risk and are not suitable for all investors. Customers must consider all relevant risk factors including their own personal financial situation before trading. Every investor who uses options should read and understand the publication Characteristics and Risks of Standardized Options. A copy can be obtained from The Chicago Board Options Exchange (1-800-OPTIONS) or from your broker. The investor considering options should consult their tax advisor as to how taxes may affect the outcome of contemplated options transactions. A prospectus, which discusses the role of the Options Clearing Corporation, is also available without charge upon request at the Options Clearing Corporation, 440 S LaSalle St, Suite 908, Chicago, Illinois 60605.*****

To unsubscribe from e-mails, please visit your Account Management page.

Note: You can always view all TradeWise content by logging onto the website at www.tradewise.com

All content ©2016 TradeWise| All rights reserved.

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