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Article Archive For John A. Sarkett
DownloadNewton's Cradle And The Short Butterfly
ARTICLE SYNOPSIS ...In option trading, a "Newton's cradle" is an offsetting debit spread position. Here is a look at this type of trade and why it is us...
Product review: 0DTE Options Trading Workshop, Part 2
ARTICLE SYNOPSIS ...Some 40% of daily trading in options is now in zero-days-to-expiration (0DTE) contracts, which are contracts that expire the same day they are traded. This is part 2 of my report on the three-week workshop...
Product Review: 0DTE Options Trading Workshop, Part 1
ARTICLE SYNOPSIS ...Some 40% of daily trading in options is now in zero-days-to-expiration (0DTE) contracts, which are contracts that expire the same day they are traded...
The Options Risk Curve Part 1
ARTICLE SYNOPSIS ...If you've tried to make profits out of option decay, you may have found yourself waiting patiently to eek out even a bit of profit. Find out what some pros have to say about this...
The Options Risk Curve Part 2
ARTICLE SYNOPSIS ...Your beautiful risk curve didn't provide you with the beautiful profits it seemed to promise on day one. Why? We asked the experts. In part 1, we covered nine of those 12 reasons. Here, we look at the next three...
This Butterfly Wears Kevlar
ARTICLE SYNOPSIS ...Butterflies are a well-known options trading strategy. But here's one that's a little different...
A Road Trip With Options Supertraders
ARTICLE SYNOPSIS ...Here's a way to trade options that allows you to spend less time managing the trade and more time to go on road trips...
The Weekly Options, Part 1
ARTICLE SYNOPSIS ...They were introduced in 2005 and have gained a strong following. How do you trade them? In this first of two parts, see how one trader uses these options....
The Weekly Options, Part 2
ARTICLE SYNOPSIS ...Last month in part 1, we tracked the growth in weekly options and presented one trader's success story trading AAPL iron butterflies. Here, we look at three more ways to trade weeklys....
The Calendar King
ARTICLE SYNOPSIS ...In options, consistency wins. Here's how one option trader fared using this concept....
The Queen Of The Iron Condors
ARTICLE SYNOPSIS ...Find out what one trader did when her favorite trading vehicle was down 43 points one Monday, en route to a 25% JulyÐOctober, top-to-bottom loss....
Backtesting Option Strategies
ARTICLE SYNOPSIS ...Looking for a quick way to backtest option strategies? You can use Excel to count occurrences of historical prices outside a price band you set to develop an expectation for future price movement. Here's how....
At The Close by John A. Sarkett
ARTICLE SYNOPSIS ...At The Close by John A. Sarkett Here's a turbocharged option strategy. Francisco Antonio Urrutia, a former banker with a penchant for a single index option and risk management, has been generating stupendous returns for the past three years. In this niche of option exotica -- several thousand individuals exclusively trading the Russell 2000 (Rut) condor -- where 100 condors per month is deemed large and carries a $100,000 theoretical risk, he does five or 10 times that size on a monthly basis, and profitably. Spread across 10 different accounts, he has averaged 10% to 15% monthly returns again...
Sizing Up For Success by John Sarkett
ARTICLE SYNOPSIS ...Sizing Up For Success by John Sarkett Here's a look at how an option trader started small and graduated to trading "more size." True to his name, option trader Tony Sizemore trades "more size" than most. After a long career in mortgage lending, which included more than a passing interest in the financial markets, he turned his attention full time to options, specifically monthly income strategies from options. "This was the first time I had enough liquid capital to pursue trading as a business, and I reasoned that if I got serious about it, I could be successful as a trader," he said. Getti...
Adjusting Option Trades With Bill Ladd by John Sarkett
ARTICLE SYNOPSIS ...Adjusting Option Trades With Bill Ladd by John Sarkett Bill Ladd, a full-time, independent option trader, spent 20-some years in the pharmaceutical industry (Burroughs Wellcome, which became Glaxo Smith/Kline) as a certified internal auditor and a certified fraud examiner. Ladd was one of the early students of 22-year Cboe veteran turned teacher Dan Sheridan, regarded as one of the foremost option mentors. When he's not trading, Greensboro, NC?based Ladd volunteers for the Service Core of Retired Executives (Score) organization and also at a local retirement community. He agreed to answer s...
How Secure Are Your Securities? by John A. Sarkett
ARTICLE SYNOPSIS ...How Secure Are Your Securities? by John A. Sarkett How well protected are your stocks and options in your brokerage account? Two classic Zen koans and one modern riddle you may never have considered: What is the sound of one hand clapping? Does a dog have Buddha nature? And how well protected are the stocks and options in your brokerage account -- not their value, which fluctuates, but their very existence? In peaceful financial times, that last query rarely arises. These are not peaceful financial times. The subprime shakeout has caused bank runs (Countrywide, Northern Rock), toppled CEOs (...
Calendar Spreads With Dan Sheridan by John A. Sarkett
ARTICLE SYNOPSIS ...Stocks & Commodities V. 25:5 (18-26): Calendar Sprerads With Dan Sheridan by John A. Sarkett In the first part of a series based on a seminar on option strategies with Dan Sheridan, we take a look at calendar spreads. Options and seminars go together like yin and yang, baseball and hot dogs, Abbott and Costello. Can't separate ?em, wouldn't want to. Ten or more years ago, some of the prominent seminars focused on straightforward strategies like put selling or vertical spreads. In a surging NASDAQ market, these one-day affairs served their purpose in helping retail stock traders become more k...
Double Calendars And Condors by John A. Sarkett
ARTICLE SYNOPSIS ...Stocks & Commodities V. 25:6 (36-39): Double Calendars And Condors by John A. Sarkett In this, the second part of a series based on an option seminar with trader Dan Sheridan, we look at the double calendar and condor strategies. With a stock at 50, an option strategist could put on a call calendar at 55 and a put calendar at 45, short June, long November, hence creating a "double calendar." Is this a good vehicle? Trader Dan Sheridan is ambivalent: "I'd rather put the calendar right at 50 and make the stock prove it's going to move, and then adjust by putting on another calendar at a higher...
Double Diagonals And Butterfly Spreads by John A. Sarkett
ARTICLE SYNOPSIS ...Trading With Dan Sheridan (Part 3) Double Diagonals And Butterfly Spreads by John A. Sarkett The third part of this series with trader Dan Sheridan looks at double diagonals with long, protective wings one or more months out from the short options, as well as the butterfly spread, an income-generating strategy. Double diagonals are Dan Sheridan's single favorite strategy, and he likes to mix double diagonals in a portfolio with condors for diversification. Here's why: While increasing volatilities hurts the condors, it helps the diagonals. So one offsets the other. Let's look at double diag...
Working Money: Trading And "Moneyball" by John A. Sarkett
How Great Traders Go Bad by John A. Sarkett
Time and Options Probabilities by John A. Sarkett
ARTICLE SYNOPSIS ...For traders who want to use options to hedge their long positions, here are the formulas for calculating the prob-abilities. What's the probability that Intel [INTC] will be above 110 at a certain point? Three months from now, six months, a year? If you were to ask random-walk partisans, they would be likely to tell you, "There's no way to know." You would get the same answer from those who disparage market timers. But change the time frame to a more manageable short-term window -- say, the week or two before the very next options expiration -- and a little-known formula would be able to give y...
The Force Index by John A. Sarkett
ARTICLE SYNOPSIS ...The Force Index by John A. Sarkett Here's a little-known indicator that combines price change and volume to create a short-term and an intermediate-term trading tool. Like ocean waves, prices have an ebb and a flow. Once in a while, however, a huge shift in price and volume hits the market with the impact of a tidal wave, setting the stage for follow-through price movement. One particular indicator, the force index, measures and depicts this major event more vividly than any other. Developed by Alexander Elder, it is presented at length in his latest book, Trading for a Living. The force i...
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