Written by A.J. Brown

I Want to Answer Your Questions


It’s a big week here in the U.S. America has elected a new President, and a new direction for the nation has been set.

Now that the election is behind us, the markets are letting off steam as all the pent-up fears and expectations are being released. Traders and investors are even now adjusting their strategies based on the outcome of the election.

The real reason for this post, however, is not to make predictions or talk about the new President. Rather, the reason for this post is to find out what’s on your mind.

You see, for the past year, this blog has been trucking along at a steady pace. And I’ve been writing pretty much whatever has been on my mind. But then I thought, “Why not find out what YOU want me to write about?”

So here’s what I want to know from you:

What is the single biggest question you have about option trading?

I’d love it if you would answer this question by leaving a question of your own in the Comments section below.

Here’s what’s in it for you:

If your question is a solid question… or if multiple people ask the same question… I will then turn that question into a blog post and answer it publicly so everybody can benefit.

Normally, I write about what I’m thinking about and what *I* think would be helpful to you. But I could be missing the mark! By getting your questions directly, I KNOW I’ll be addressing your questions, problems, and concerns head-on.

Which will make this blog more helpful to you, as well as all the other option traders who are reading right along with you.

Thanks for “playing along” with me. I appreciate it!

Best regards always,

A.J. Brown

P.S. If you have more than one question, feel free to share both of them.

20 Responses to “I Want to Answer Your Questions”

Pages: « 1 [2] Show All

  1. Clare @ 3:24 pm:

    Hi A.J.

    How do you determine which strike price to use?
    Have you decided on the dates for your March Intensive? I can’t wait.

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  2. PUSHBAC @ 4:31 pm:

    New to this, how does volatility when high compare to option trading, than when it is lower?? Are certain option trades better over others. I know a naked option would probably be suicide. But wondering should we be considering verticals, calendars, etc.

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  3. lou gonell new york @ 11:38 am:

    during this year many investors have gotten hit hard with losses including myself.. how do you bounce back after a setback.. i was up huge my first year of trading only to be overconfident and give it back.. how do you bounce back?? the investor needs trust!!!

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  4. Jed @ 7:49 pm:

    Didn’t we just have our followthrough day on your counting system? What happened, the market seems to be going down, instead of changing direction? Is the counting system flawed?

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  5. mike @ 3:06 am:

    Hi PUSHBAC…

    I’ve been paper trading for a while, and was having good luck with strangles (one long put, and one long call, each near or at the money.) But that is getting over-used, and the payoffs are flattening out while the time decay is rising. That is how they keep it a zero-sum game.

    I did find a loophole that really broke me free in this relatively flat market, making $5000 an hour today before closing. I start with a strangle on something volatile in the 80+ range of strikes, then put trailing stops on each side separately.

    Then I submit a cancel/replace sell limit order on the winning side, but wait to pull the trigger manually by following Wilder’s Volatility Indicator in conjunction with the MACD. When the volatility peaks and the MACD soars or tanks as the case may be, and if the trail stop hasn’t kicked me out, I pull the trigger to cancel replace the trail stop with the manual limit order for a quick sale.

    There is likely a way to automate this entire process, but with an additional kicker to double your profits. When you sell the loser, sell it DOUBLE to make it a credit spread, with a trailing stop limit. This gets very confusing to the old meat computer, even though I am actually an engineer used to similar nutty crisis management, and also usually delivered by the bean counters. :p

    Things happen very fast in this twitchy market, so you definitely want to have an order script built for this. Now exactly how do we do that?

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  6. Cal @ 1:32 pm:

    Please tell me what is the most widely used overbought/oversold oscillator, which one is the best, and how can I get a daily read on the status of the most widely used oscillator.

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  7. William @ 2:47 pm:

    Cyril, we don’t know the extent of your options education, but there creative combo setups, one of which might be useful to you. I.e., there is a range of spread trades, like credit, debit, vertical, etc. I watched a video of a trader using a method of trading the same stock as it moved up, pulled back, and moved up again, etc. with the use of a Call going up; then as the retracement began, he bought a synthetic Put without closing his Call, followed the pull-back down until it turned, sold the Put, and restored his Call to continue in the trade. Now…I don’t know how to do all that yet, but it’s an example of creative strategy. No doubt, this aspect of trading education refreshes itself all the time. Enjoy Phuket!

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  8. A.J. Brown @ 10:24 pm:

    Hi Jed,

    No, indeed we did not reach our “follow through” day to our counting method to determine a market bottom on November 4, 2008.

    To satisfy the counting method to determine a market bottom, we must, on day 4-7, see over 1% price movement on heavy / above average volume.

    For the last weeks, the Trading Trainer community and I have been reviewing how important volume validation is to any technical analysis confirmation. This is a perfect case where we saw the price component of our test satisfied but the volume component not satisfied at all.

    Also, with respect to the broad market, we’ve been reviewing in depth that we’re at that point where the broad market’s personality could be that of a trend reversal up, but could also equally be that of a trend continuation down or a channel movement horizontally. Again, price direction on heavy above average volume would clear up this stalemate for us. In the meantime, nothing is definitive.

    Jed, thanks for your question. I’ll definitely blog about this topic in the future. After all, our tools are only accurate when we use them correctly. In this case, it wasn’t our counting method that was flawed.

    Stay tuned for a post on this topic, Jed. Thanks again!

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  9. mike @ 5:32 am:

    Hi William…

    That is what I am doing with my strangles to start, then sell the losing side back double to reverse it to credit from debit to run with the winner once a trend establishes. I am using Thinkorswim Paper Money to do this, and “lock” my trstplmt up or down a few notches at a time, based on the “Buy lower, Sell higher” theory.

    This falls apart when the market goes into fibrillation near the extremities of the range, so it is good to have a panic button “blast all” closeout setup to liquidate the pair of positions. Of course, that is all rendered moot if you lose your net connection, or the computer crashes. If one were doing this seriously, you would need a second backup connection and a second computer to insure against losses.

    It is a lot of fun though, and gets you thinking fast on your feet… or keyboard and mouse. I can see why an NFL’er like Pete Najarian thrives on this stuff.

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  10. Online Options Trading @ 3:41 am:

    my question is at what stocks we should use covered call strategy? as we all know that even a blue chip stocks such as LEH and AIG could go down.

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