The Construct of $VIX Futures

By Lawrence G. McMillan

We continue to get questions regarding why the $VIX futures are priced as they are, and how one should interpret that information.  This is a subject that we have discussed many times in the past, but it is probably worthwhile to review it again.

There are two significant pieces of data that one should always be aware of, when evaluating $VIX futures: 1) the relationship of the futures to $VIX itself,

Weekly Stock Market Commentary 3/21/14

By Lawrence G. McMillan

The market action in the last 10 days has been a complete whipsaw. Now, the chart of the Standard & Poors 500 Index ($SPX) shows the index to be in a trading range -- bounded by resistance at 1880+ (the all-time highs) and support at 1840 (last Friday's lows).

Equity-only put-call ratios remain on sell signals, even though the market has bounced back this week.

The Option Strategist Newsletter Volume 23, No. 05 Preview

By Lawrence G. McMillan

There will be a very slight alteration of our publishing schedule.  The second issue in March will be published one day early, on Wednesday, March 26th.  This is because of the AAPTA Conference in Austin, to which I will be traveling on Thursday, March 27th (the usual publishing day).

Coinciding Signals - $VIX Spike Peak & Modified Bollinger Band

By Lawrence G. McMillan

When one is using technical systems for trading, it seems logical to expect that when two or more systems are giving similar signals, the result should be better than when a lone system is generating a signal. But does an analysis of the results confirm that fact? In this article, we’re going to look at a couple of our own systems and determine when they had coinciding signals.

Introduction to Option Workbench 3.0 (Video)

We are proud to announce the release of Option Workbench 3.0. This upgrade to Option Workbench puts even more power in your hands with these new features:

  • FREE delayed market quotes for equities, ETFs and options with the ability to upgrade to real-time for a modest price
  • Execute trades with select brokers or in your Option Workbench Virtual Account
  • Manage your option strategies the way option traders think
  • Monitor your positions' P&L, risk and expected value in real time.

Weekly Stock Market Commentary 3/14/14

By Lawrence G. McMillan

This stock market has been able to ward off even a modest correction since the fall of 2012. However, we are now seeing a chart breakdown accompanied by sell signals from some of our most trusted indicators. If the bears can't make some hay with this environment, I would be surprised.

Equity-only put-call ratios have rolled over to sell signals.

Short-Term Sell Signals Have Been Registered

By Lawrence G. McMillan

And so it begins.  Sell signals have been registered, and it is possible that more will follow. $SPX closed off nearly 10 points yesterday, as attempts to rally all afternoon eventually failed, and the index closed near its lows.  S&P futures have traded another 5 points lower overnight.  This activated the “modified Bollinger Band” sell signal.

Exiting a Put For Parity Near Expiration

By Lawrence G. McMillan

Often at expiration, an option trader will have in-the-money options that need to be either exited or rolled. Market makers know this and purposely widen the spreads in the market so that the bid for the option is below parity. On expiration day, the option has a value of at least parity so the astute trader must always make sure he exits the position at parity or higher. For a put, parity is the strike price minus the underlying price.

Announcing Option Workbench 3.0

By Craig Hilsenrath

We are proud to announce the release of Option Workbench 3.0! This upgrade to Option Workbench puts even more power in your hands with these new features:

Weekly Stock Market Commentary 3/7/14

By Lawrence G. McMillan

This week's action makes the $SPX chart bullish (how could it be anything else when trading at new all-time highs?).

There is no technical resistance for a chart at new all-time highs. There is support at 1850 (which had been resistance), then at 1825- 1835 below that.  It is our opinion that a close below 1825 would be quite negative.

Equity-only put-call charts continue to be bullish.

Trading or investing whether on margin or otherwise carries a high level of risk, and may not be suitable for all persons. Leverage can work against you as well as for you. Before deciding to trade or invest you should carefully consider your investment objectives, level of experience, and ability to tolerate risk. The possibility exists that you could sustain a loss of some or all of your initial investment or even more than your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and investing, and seek advice from an independent financial advisor if you have any doubts. Past performance is not necessarily indicative of future results.
Visit the Disclosure & Policies page for full website disclosures.