Blue Men and Scalping

I am no promoter.  I don’t go to plays or theater often.  I spend most of my time watching the Discovery Channel with my kids – we love Man vs. Food.  However, last week I went to see The Blue Man Group here in Chicago and took my son who just turned 13.  If you have not seen it, the show is a mix of science, music and art – all presented by 3 guys with blue paint on their faces.  Of course, when I told my son we had tickets, he balked and did not want to go.  He’d rather go see The Hunger Games for the 5th time and he said the stuff I like sucks.  Well, Matt my son, I will accept your apology any time.  He loved it and so did I.  I will not do it injustice by trying to describe it.  But if you get a chance, go check it out.  My 13 year old won’t admit it but he highly recommends it.

Last week we talked a bit about risk – real vs. perceived.  Underlying movement vs. the premium the options markets put in the price of options above the intrinsic value – the implied volatility.  When the options markets get nervous -  they bid up options.  When things calm, they offer them out and implied volatility goes down.  Simple supply and demand.

But what is a fair price?  How do we know if we are paying too much or selling too cheap?  There are plenty of models that will determine what the theoretical value is of an option.   At the end of the day, they are all pretty much the same and most value options pretty much the same.  The real value is in the delta calculation.  But that’s a discussion for another time.

First, fair value is different than theoretical value.  Theoretical value is what an option model calculates an option to be worth based on a set of inputs.  Fair value can be thought of as the price I pay for an option where the theta is exactly offset by scalping the gamma.  For those unfamiliar with gamma scalping, it is basically buying or selling the amount of delta the option changes with movement in the underlying.

For example, if we own calls and the market goes up, then the delta increases.  Scalping the gamma means we sell deltas to flatten long delta back to 0.  As markets move around we would be buying as markets fall and selling as markets rise.  If this “scalping” offsets the theta effect of being long the option between purchase and expiration, the option has been purchased at fair value.

Steve Papale is a mentor with DiscoverOptions, the educational arm of OptionVue Systems.  Inquiries should call 847-816-6610 or email info@DiscoverOptions.com.

The Prepared Mind 5.14.2012

The markets were kept off balance the entire the entire week by a continuing onslaught of news. The trading week started Sunday night with the results of the French and Greek elections.  French Socialist François Hollande defeated conservative incumbent Nicolas Sarkozy by promising to end austerity policies. The elections in Greece and the accompanying gains by leftist parties left it unable to form a coalition.   The economic bailout of Greece is impossible without a functioning government. The Spanish government intervened in the case of Bankia, the country’s largest bank, with 10 billion euro to cover bad loans. This further raised concerns about the state of the European economies.

The week ended with JPMorgan Chase announcing it suffered $2 billion in trading losses in recent weeks and said it could face an additional $1 billion in losses because of market volatility. The stock responded by losing nearly 10% of its market value.

The indexes showed increased intra-day volatility.  The SPX ended the week down 15.71 points or down 1.67% at 1,353.29.  The Dow Jones Industrial Average closed under 13,000 at 12,820.60 – down 217.67 points or -1.67%  The Russell 2000 (RUT) closed at 790.06, loss of 1.78 points – down 0.22%.   The NDX lost 21.94 points or 0.83% to close at 2,615.98.    The S&P 100(OEX) closed down 1.19% at 615.34.  The VIX reflected the negative sentiment or fear in the market, remaining steady and closing at 19.89% – a gain of 4.05%.

Here is a capsule view of last week’s market numbers (N.B. – I have added the OEX -S&P 100 to the table):

Index Close Weekly Change % Weekly % YTD Volatility of  Index
Dow Jones Industrials (DJIA) 12,820.60 -217.67 -1.67% 4.94% 18.34% (VXD)
S&P 500 (SPX) 1,353.39 -15.71 -1.15% 7.62% 19.89% (VIX)
NASDAQ 100 (NDX) 2,615.98 -21.94 -0.83% 14.85% 21.79% (VXN)
Russell 2000 (RUT) 790.06 -1.78 -0.22% 6.63% 25.91% (RVX)
S&P 100 (OEX) 615.34 -7.39 -1.19% 7.80% 20.56% (VXO)
CBOE Volatility Index (VIX) 19.89 0.77 4.05% NA

This is expiration week.  Focus on closing the current expiration cycle and opening new positions.  Do not ignore cheap out of the money options.  Be aware of the risk in your entire position.  The coming week will be heavy on news which can move the market.  The main earnings announcement cycle is complete.  U.S. Economic announcements will focus on trade consumer spending, manufacturing and housing.  News from Europe will continue to be a focus of traders.  Continue to be prepared for any “wild card” announcements – i.e. JPMorgan Chase.  Be nimble, be careful, be disciplined, and to not allow yourself to be caught unawares.

Remember:

“Chance favors the Prepared Mind.” – Louis Pasteur

This week’s economic news (All times are Eastern Daylight Time.) Dates and times are subject to change):

Monday May 14:

Economic:  Nothing Scheduled.

Earnings:  BMO:  Interoil (IOC), Valspar (VAL); AMC:  Agilent (A),Alcan (AL), Groupon (GRPN),

Other:  Euro-zone finance ministers meet.

Tuesday May 15:

Economic: ICSC-Goldman Sachs Weekly Retail Store Sales – 7:45, Consumer Price Index – 8:30, Retail Sales – 8:30, Empire State Manufacturing Survey – 8:30, Redbook – 8:55, Treasury International Capital – 9:00, Business Inventories – 10:00, Housing Market Index – 10:00.

Earnings: BMO:  Arctic Cat (ACAT), Dick’s Sporting Goods (DKS), Home Depot (HD),  Monroe Muffler Brake (MNRO), TJX Companies (TJX), Valspar (VAL)AMC:  J. C. Penney (JCP), Ralcorp (RAH), Tumi (TUMI).

Other: Dallas Federal Reserve President Richard Fisher speaks to a business audience at the “Growth DFW” – 1:45.

Wednesday May 16:

Economic:  MBA Purchase Applications – 7:00, Housing Starts – 8:30, Industrial Production – 9:15, EIA Petroleum Status Report – 10:30, FOMC Minutes – 2:00.

Earnings:  BMO:  Abiomed (ABMD), Abercrombie &Fitch (ANF), Barady Corp. (BRC),  Deere & Co (DE), Eagle Materials (EXP), Staples (SPLS), Target (TGT);  AMC:  Cost Plus (CPWM), Jack in the Box (JACK), Limited Brands (LTD), Red Robin (RRGB).

Other: St. Louis Federal Reserve Bank Pres. James Bullard speaks at the Lousiville branch of the Bank on the subject of “The U.S. Economy and Monetary Policy.

Thursday May 17:

Economic:    Jobless Claims – 8:30, Bloomberg Consumer Confidence Index – 9:45, Philadelphia Fed Survey – 10:00, E-Commerce Retail Sales – 10:00, Leading indicators – 10:00, EIA Natural Gas Status Report – 10:30.

Earnings:  BMO:  Advance Auto Parts (AAP), Buckle (BKE), Computer Sciences (CSC), Dollar Tree Stores (DLTR), GameStop (GME), Precision Castparts (PCP), Ross Stores (ROST), Sears Holdings (SHLD), Wal-Mart (WMT), Williams-Sonoma (WSM); AMC:  Aeropostale (AR), Saesforce.com (CRM), Gap 9(GPS), Intuit (INTU).

Other:  Last day of trading for May options on SPX, NDX, MNX, and RUT. Facebook prices its initial public offering.

Other:  Friday May 18:

Economic: None scheduled.

Earnings: BMO: Ann Taylor (ANN), Foot Locker (FL), Hibbett Sports (HIBB).

Other:  May options expiration.

Other: IMF Chief Christine Lagarde and World Bank President Robert Zoellick speak about debt at the Bretton Woods conference in Washington.

Monday May 21:

Economic:  Chicago Fed National Activity Index – 8:30.

Earnings:  BMO: Campbell Soup (CPB), Krispy Kreme Doughnuts (KKD), Tidewater (TDW), Tech Data (TECD), ;  AMC: Nordson (NDSN), Urban Outfitters (URBN).

Other:  Atlanta Federal Reserve Bank Pres. Dennis Lockhart speaks to the Institute of Regulation and Risk North Asia in Tokyo.

VXX / XIV Trading Report

There has been a lot of interest in the new VXX Trading Tools available in the OptionVue 7 program.  Included in the annual subscription are monthly status updates and notifications of trade alerts (entry/exit points) as they occur.  I thought I would share the first monthly status email set out on the first by our president, Len Yates.

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VXX / XIV Trading Report for May 1, 2012 (2:30 pm CST)

VXX at 16.02

XIV at 12.34

The signals indicate remaining long the XIV at this time.  The XIV pulled back last month and, as it turned out, presented a good buying opportunity.  For anyone who went through this pull-back, it may have seemed a bit scary at the time.  However, the Lentz Volatility indicator never showed that the market’s drop was anything other than a nominal correction.  It is important to hold on through such corrections.  With the $VXDIF at a strong +2.00 level we continue to hold our long XIV position.

It is worth noting that this is the first monthly status report we have issued.  We first published the article introducing the VXX Trading system and began offering the VXX Trading Tools to OptionVue clients on April 11, 2012.  At that time the signal was to be long the XIV, which opened at $10.35 the next day.  Purchasing 100 shares of the XIV at that time would have cost $1,035 (ignoring commissions), and currently would be worth $1,234 for a profit of $199 or a 19% return.

Naturally not everyone receiving this email purchased the VXX Trading Tools would have got in at that exact time.  But I thought it would be useful to set a baseline which could be used to track performance over time, so that in each monthly status report I can include the results for the previous calendar month as well as from 4/11/12, a date that someone that was interested in the ideas that were presented in my article could have reasonably been able to open a position.

Len Yates

Disclaimer: There is a substantial risk of loss in trading financial instruments of any kind including stocks, futures and options. Clients should consider all relevant risk factors, including their own personal financial situation, before trading. Don’t trade with money you can’t afford to lose. Past performance is not indicative of future results.

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For those that are not familiar with the VXX Trading System, you can read the article about in the latest issue of our quarterly OptionVIEWS newsletter: Check out the OptionVIEWS e-zine

The Prepared Mind 5.7.2012

Another week, another story.  It is also the 2nd anniversary of a story most of us would like to forget.  The Flash Crash occurred May 6, 2010.  Last week’s story line included a characterization by many the market pundits that the two week drop at the beginning of April was “the market correction.” This week the story was definitely Dickensian:

“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to heaven, we were all going direct the other way – in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only.”

It is apparent the pundits are right less often than a broken clock gives the correct time. While markets remained focused on Europe, the primary emphasis for the week was upon the monthly jobs report.  This “First Friday” occurrence has been gaining increasing importance over the past year.  It can be seen in the market volatility during the days preceding the Friday announcement.  The anticipation of the announcement and the announcement itself did not disappoint fans of volatility.  However, disappointment arose from a slowing in the momentum in jobs growth combined with a perception the slowdown was not enough to kick start QE3.

The indexes gave back the previous week’s gains and then some. The SPX ended the week down 34.26 points, or down 2.44%, at 1,369.10.  The Dow Jones Industrial Average closed at 13,038.27 – down 190.04 points or -1.44%.  The Russell 2000 (RUT) closed at 791.84, loss of 32.95 points – down 3.99%.   The NDX lost 103.42 points or 3.77% to close at 2,637.92.    The S&P 100(OEX) closed down 2.29% at 622.73.  The VIX reflected the negative sentiment or fear in the market by closing at 19.12% – a gain of 17.13%.

Here is a capsule view of last week’s market numbers (N.B. – I have added the OEX to the table):

Index Close Weekly Change % Weekly % YTD Volatility of  Index
Dow Jones Industrials (DJIA) 13,038.27 -190.04 -1.44% 6.72% 17.06% (VXD)
S&P 500 (SPX) 1,369.10 -34.26 -2.44% 8.87% 19.06% (VIX)
NASDAQ 100 (NDX) 2,637.92 -103.42 -3.77% 15.81% 21.10% (VXN)
Russell 2000 (RUT) 791.84 -32.95 -3.99% 6.87% 25.48% (RVX)
S&P 100 (OEX) 622.73 -15.26 -2.39% 9.10% 18.82% (VXO)
CBOE Volatility Index (VIX) 19.12 2.80 17.13% NA

The coming week will be heavy on news which can move the market.  Earnings announcements tail-off this week.  The decrease in earnings announcements removes the source of major positive impacts on individual stocks and the indexes. The French election this weekend may have a big impact on worldwide markets.      U.S. Economic announcements will focus on trade and consumer confidence.  The focus will be on Friday’s Chinese’ PPI and CPI.  Be prepared for any “wild card” announcements.  Be nimble, be careful, be disciplined, and to not allow yourself to be caught unawares.

Remember:

“Chance favors the Prepared Mind.” – Louis Pasteur

This week’s economic news (All times are Eastern Daylight Time.) Dates and times are subject to change):

Monday May 7:

Economic:  Consumer Credit – 3:00

Earnings:  BMO:  BroadSoft (BSFT), Cinemark (CNK), Echostar (DISH); AMC:  Churchill Downs (CHDN), Dun & Bradstreet (DNB), Kemper (KMPR), MAKO Surgical (MAKO), Oasis Petroleum (OAS), Backspace Hosting (RAX), Salix Pharmaceuticals (SLXP), Tesoro (TSSL).

Other:  Runoff election for French President.  Greek Parliamentary elections.  U.K. markets closed.   Richmond Federal Reserve Bank Pres. Jeffrey Lacker speaks to business and government executives and community leaders on “Technology, Unemployment and Workforce Development in a Rapidly Changing World” – 6:00.

Tuesday May 8:

Economic: NFIB Small Business Optimism Index – 7:30, ICSC-Goldman Sachs Weekly Retail Store Sales – 7:45, Redbook – 8:55.

Earnings: BMO:  Charter Communications (CHTR), Discovery Communications (DISCA), Dolan Media (DM), Fossil (FOSL), Gaylord Entertainment (GET), HSBC Holdings (HBC), Henry Schein (HSIC), International Flavors & Fragrances (IFF), Liberty Media (LMCA), Perrigo (PRGO), Scotts Miracle-Gro (SMG), Molson Coors (TAP), Transdigm (TDG), Treehouse Foods (THS), Vitamin Shoppe (VSI);  AMC:  EOG Resources (EOG), Jazz Pharmaceuticals (JAZZ), Loral Space (LORL), Medivation (MDVN), Blue Nile (NILE), Ralcorp (RAH), Solera Holdings (SLH), URS (URS).

Other: Dallas Federal Reserve President Richard Fisher speaks to a business audience at the “Growth DFW” – 1:45.

Wednesday May 9:

Economic:  MBA Purchase Applications – 7:00, Wholesale Trade – 10:00, EIA Petroleum Status Report – 10:30.

Earnings:  BMO:  AboveNet (ABVT), Agrium (AGU), AOL (AOL), Dril-Quip (DRQ), Dollar Thrifty (DTG), Enbridge (ENB), Macy’s (M),  SodaStream (SODA), Stratasys (SSYS), Teva Pharmaceutical (YEVA), Toyota Motor (TM):  AMC:  American Science and Engineering (ASEI), BMC Software (BMC), Copa Holdings (CPA), CISCO (CSCO), 51Job (JOBS), Monster Beverage (MNST), Neenah Paper (NP), Priceline (PCLN), Tesla Motors (TSLA).

Other: Cleveland Federal Reserve Bank President Sandra Pianalto speaks to the “Women Leading Kentucky, Women’s Business and Leadership Conference” – 10:45.  Philadelphia Federal Reserve Bank President Charles Plosser speaks at the Bank’s conference on “Reinventing Older Communities” -12:00.

Thursday May10:

Economic:   International Trade – 8:30, Jobless Claims – 8:30, Import and Export Prices – 8:30, Bloomberg Consumer Confidence Index – 9:45, EIA Natural Gas Status Report – 10:30, Treasury Budget – 2:00.

Earnings:  BMO:  AMC Networks (AMCX), Belden (BDC), Kohl’s (KSS), Sony (SNE);  AMC:  Sotheby’s (BID), Express Scripts (ESPX), Heart Ware (HTWR), Nordstrom (JWN), Molycorp (MCP), Nuance (NUAN), Wynn Resorts (WYNN).

Other: Bank of England interest rate announcement.  Federal Reserve Chairman Ben Bernanke to speak via satellite at the 48th Annual Conference on Bank Structure and Competition, sponsored by the Chicago Fed.  Minneapolis Federal Reserve Bank President Naryana Kocherlakota speaks to the Business Law Institute in Minneapolis on “Toward a More Transparent FOMC’ – 10:00.

Friday May 11:

Economic: Producer Price Index – 8:30, Reuters/University of Michigan Consumer Sentiment – 9:55.

Earnings: BMO: Dillard’s (DDS), NVIDIA (NVDA), Dr. Reddy’s (RDY).

Other: Chinese Producer Price Index and and Consumer Price Index announcement.  Dallas Federal Reserve Bank President Richard Fisher speaks to the Texas Bankers  - 9:15.

Monday May 14:

Economic:  Nothing Scheduled.

Earnings:  BMO:  Interoil (IOC), Valspar (VAL); AMC:  Agilent (A),Alcan (AL), Groupon (GRPN),

Other:

Frank Fahey is a mentor with DiscoverOptions, the educational arm of OptionVue Systems.  Inquiries should call 847-816-6610 or email info@DiscoverOptions.com.

iThings and iOptions

I did an informal statistical analysis the other day and determined that I, along with 14 others in the United State,s are the only people who do not own or are planning to own a product from Apple.  I phones, I pads, itouch, imacs and whatever other iproducts they have…people love them and pay up for them.  I figure it won’t be long until they will start moving into other products as well.  We’ll be driving to work in our icars and filling them up with igas.  People will be riding their ibikes and running with their new ishoes (probably with iphones in them ala “Get Smart”).  At the end of the day, I might get home and grab an ice cold ibeer from the fridge or a glass of itea.  Turning on my iTV I can catch some iNBA playoffs.  In the meantime I’m hanging on to my Blackberry.  It might be worth something someday.

Recently, I saw an interesting statistic.  The cost of life insurance has dropped 40% in the last 15 years.  I assume this is due to the fact people are generally more healthy and living longer.  The perceived risk by insurance companies to underwrite policies has gone down so the price has dropped.  The longer people live then the longer they can pay their premiums and the more into the future the possible payout for the insurance company.

This is the same effect that occurs in the options market.  When the perception of risk goes down, the price of options (insurance policies) falls.  We have seen this over the last 6 months.  In early October, the VIX peaked at just over 45.  That was when the market was in free fall and fear was at its peak.  Since then the market has rallied back and the fear has dropped as well, pushing the VIX to its current level around 17.

Pricing of options and insurance is all about risk – real and perceived.  Real risk in the options market might be thought of as movement in the underlying.  This could be reflected by the intrinsic value of the option.   As real risk is actualized, options move in or out of the money.  Perceived risk is the FEAR that an option could move either in the money if it is currently out of the money…or out of the money if it is currently in the money.  This perceived risk is measured by the time premium, or in other words, the extrinsic value.  Both risks – real and perceived added together — equal the total price of an option.  That price represents the collective opinion of the market on what it is willing to pay for insurance at a given time.  Is it a fair price?  We’ll look at that next week.

Steve Papale is a mentor with DiscoverOptions, the educational arm of OptionVue Systems.  Inquiries should call 847-816-6610 or email info@DiscoverOptions.com.

The Prepared Mind 4.30.2012

Tenor of the Market

The tenor of the market changed yet again last week.  Some market pundits started to characterize the two week drop at the beginning of April as “the market correction.”  Strong corporate earnings  led by Apple (AAPL) and AMZN) combined with Ben Bernanke’s stated plans to keep interest rates low led to across the board gains in the major indexes.  These overshadowed the continuing debt crisis in Europe, Britain’s officially entering recession with a quarterly decline in GDP, Spain’s credit rating being reduced, and a slowing in U.S. economic growth to 2.2% from 3% the previous quarter. The SPX ended the week up 24.83 points or  up 1.80%  at 1,403.36.  The Dow Jones Industrial Average closed at 13,228.31 – up 199.05 points or + 1.53%  The Russell 2000 (RUT) closed at 824.79, a gain of 22.44 points – up 2.80%.   The NASDAQ 100 (NDX) reflected strong upward moves by Apple and Amazon.  The NDX gained 65.30 or 2.44% to close at 2,741.34    The VIX reflected the sideways move  by closing at 17.44% – a loss of 10.79%.

Here is a capsule view of last week’s market behavior:

Index Close Weekly Change % Weekly % YTD Volatility of  Index
Dow Jones Industrials (DJIA) 13,228.31 199.05 1.53% 8.27% 14.74% (VXD)
S&P 500 (SPX) 1,403.36 24.83 1.80% 11.59% 16.32% (VIX)
NASDAQ 100 (NDX) 2,741.34 65.30 2.44% 20.35% 17.52% (VXN)
Russell 2000 (RUT) 824.79 22.44 2.80% 11.32% 22.35% (RVX)
CBOE Volatility Index (VIX) 16.32 -1.12 -6.42% NA

The coming week will be heavy on news which can move the market.  Earnings announcements will start to tail off on Thursday.  Spain and France will have debt auctions on Thursday.    Economic announcements will focus on jobs.  The focus will be on Friday’s April Jobs Report.  Any downside jobs surprise will force the markets lower.  The ECB (European Central Bank) announcement on Thursday will be watched very closely.  Special emphasis will be placed on any comments about the future of the continent’s economy by ECB President Mario Draghi.   Be nimble, be careful, be disciplined, and to not allow yourself to be caught unawares.

Remember:

“Chance favors the Prepared Mind.” – Louis Pasteur

This week’s economic news (All times are Eastern Time.  Dates and times are subject to change):

Monday April 30:

Economic:  Economic:  Personal Income and Outlays – 8:30, Chicago PMI – 9:45, Housing Vacancies – 10:00, Dallas Fed Manufacturing Survey – 10:30, Farm Prices – 3:00.

Earnings :  BMO:  Armstrong World Industries (AWI0, Corn Products (CPO), Harman International (HAR), Holly Energy (HEP), Humana (HUM), Loews (L), Mercury General (MCY, Sohu.com (SOHU), Tenneco (TEN), Watson Pharmaceuticals(WPI);  AMC:  Andarko Petroleum (APC), General Cable (BGC), Sourcefire (FIRE), Flowserve (FLS), FMC (FMC), Jacobs Engineering (JEC), Luminex (LMNX), McKesson (MCK), Suncor (SU),  VIVUS (VVUS).

Other:  Dallas Federal Reserve Bank Pres. Richard Fisher participates in a Panel discussion at the 2012 Milken Institute Global Conference – 5:30.

Tuesday May 1:

Economic: Motor Vehicle Sales, ICSC-Goldman Sachs Weekly Retail Store Sales – 7:45,  Redbook – 8:55, ISM Manufacturing Index – 10:00, Construction Spending -10:00.

Earnings: BMO:  Archer-Daniels-Midland (ADM), Automatic Data Processing (ADP), Arrow Electronics (ARW), Avon Products (AVP), Becton Dickinson (BDX), Biogen Idec (BIIB), BP (BP), Dominos Pizza (DPZ), Ecolab (ECL), Emerson Electric (EMR), FirstEnergy (FE), Harris Corp (HRS), Marsh & McLennan (MMC), Marathon Petroleum (MPC), PF Chang’s (PFCB), Pfizer (PFE), ProLogis (PLD), Techne (TECH), Teleflex (TFX), TRW Automotive (TRW), Valero Energy (VLO), Wisconsin Energy (WEC):  AMC:  Bi-Rad Laboratories (BIO), CBOE Holdings (CBOE), CBS (CBS), Cabot Corp. (CBT), Catalyst Health (CHSI), Chesapeake Energy (CHK), Curtiss-Wright (CW), DaVita (DVA), Jazz Pharmaceuticals (JAZZ), Motorola Mobility (MMI), Open Table (OPEN), Peet’s Coffee & Tea (PEET), Papa John’s (PZZA), Ralcorp (RAH), Sturm Ruger (RGR). .

Other:  Richmond Federal Reserve Bank Pres. Jeffrey Lacker speaks at the Bloomberg Washington Summit, San Francisco Federal Reserve Bank Pres. John Williams will speak to the Milken Institute 2012 Global Conference – 11:00, Chicago Federal Reserve Pres. Charles Evans and Atlanta Fed Pres. Dennis Lockhart participate on a panel discussion on “The Limits of U.S. Monetary Policy” at the Milken Institute 2012 Global Conference – 12:30 , Philadelphia Federal Reserve Pres. Charles Plosser speaks to the CFA Society of San Diego on the economic outlook – 2:00.

Wednesday May 2:

Economic:  MBA Purchase Applications – 7:00, Challenger Job Cut Report – 7:30, ADP Employment Report – 8:15, Treasury Refunding – 9:00, Factory Orders – 10:00, EIA Petroleum Status Report – 10:30.

Earnings:  Barrick Gold – (ABX), Allergan (AGN), Amerigroup (AGP), Franklin Resources (BEN), Clorox (CLX), Comcast (CMCSA), CVS Caremark (CVS), Devon Energy (DVN), Garmin (GRMN), Intercontinental Exchange (ICE), Mastercard (MA), MSCI (MSCI), SPX (SPX), Time Warner (TWX);  AMC:  Allstate ALL), Acme Packet (APKT), Concur Technologies (CNQR), Covance (CVD), Concho Resources (CXO), Gulfmark Offshore (GLF), Green Mountain Coffee Roasters (GMCR), Murphy Oil (MUR), Prudential Financial (PRU), Pioneer Natural Resource (PXD), Transocean (RIG), Boston Beer (SAM), Sunoco (SUN), Visa (V), Whole Foods (WFM), Zillow (Z).

Other: Federal Reserve Gov. Daniel Tarullo speaks to the Council on Foreign Relations, in New York, and will answer questions from the audience – 8:00,  Richmond Federal Reserve Bank Pres. Jeffrey Lacker speaks to the Economics Club of Hampton Roads Economic Conference on the “Economic Outlook, May 2012″ – 12:30.

Thursday May 3:

Economic:   Jobless Claims – 8:30, Q1 Productivity – 8:30, Bloomberg Consumer Confidence Index – 9:45, ISM non-Manufacturing Index- 10:00, EIA Natural Gas Status Report – 10:30.

Earnings:  BMO:  American Tower (AMT), Apache (APA), Airgas (ARG), Beam (BEAM), Cardinal Health (CAH), CIGNA (CI), Hyatt Hotels (H), Gartner (IT), Lear (LEA), Elizabeth Arden (RDEN), Royal Gold (RGLD), Sara Lee (SLE), Viacom (VIA); AMC:  American International Group (AIG), Air Methods (AIRM), CF Industries (CF), Dolby Labs (DLB), Dresser-Rand (DRC), Fluor (FLR), HeartWare (HTWR), Kraft Foods (KFT), Linkedin (LNKD), Mohawk (MHK), MicroStrategy (MSTR), Public Storage (PSA).

Other: European Central Bank Announcement – 8:30, Federal Reserve Bank Presidents Charles Plosser — Philadelphia, Dennis Lockhart — Atlanta and John Williams — San Francisco are among the presenters at the University of California at Santa Barbara Economic Forecast Project 2012.   Japanese Markets closed.

Friday May 4:

Economic: Monster Employment Index, April Non-Farm Payrolls, April Unemployment Rate – 8:30.

Earnings: BMO: Estee Lauder (EL), Exelon (EXC), ITT (ITT), Madison Square Garden (MSG), Northwest Natural Gas (NWN), US Cellular (USM).

Other: Japanese Markets closed.

Monday May 7:

Economic:  Consumer Credit – 3:00

Earnings:  BroadSoft (BSFT), Cinemark (CNK), Echostar (DISH); AMC:  Churchill Downs (CHDN), Dun & Bradstreet (DNB), Backspace Hosting (RAX), Salix Pharmaceuticals (SLXP), Tesoro (TSSL).

Other:  Runoff election for French President.  Greek Parliamentary elections.

Frank Fahey is a mentor with DiscoverOptions, the educational arm of OptionVue Systems.  Inquiries should call 847-816-6610 or email info@DiscoverOptions.com.

The Prepared Mind 4.23.2012

The market held steady following the worst week of the year.   There was a push and shove between better than expected corporate earnings, less than positive economic news, and the European financial crisis.  The performance of a number of high-flyers also dampened market sentiment.  Apple (AAPL) was down 5.3% (over 10% from its recent record high),  Priceline.com (PCLN) was down 3.4% and Chipotle Mexican Grill (CMG) was down 5%.  These stocks have led the way in the rally from  October’s lows.  The SPX ended the week down 8.27 points or  up 0.60%  at 1,378.53.  This is within 3% of a three year closing high.   The Dow Jones Industrial Average closed up 179367 points or + 1.40%  The Russell 2000 (RUT) closed at 802.35, a gain of 5.44 points – up 0.68%.   The NASDAQ 100 (NDX) reflected Apple’s downward move with a loss of 22.95 points or -0.85%,    The VIX reflected the sideways move  by closing at 17.44% – a loss of 10.79%.

Here is a capsule view of last week’s market behavior:

Index Close Weekly Change % Weekly % YTD Volatility of  Index
Dow Jones Industrials (DJIA) 13,029.26 179.67 1.40% 6.64% 15.59% (VXD)
S&P 500 (SPX) 1,378.53 8.27 0.60% 9.62% 17.44% (VIX)
NASDAQ 100 (NDX) 2,676.04 -22.95 -0.85% 17.48% 20.17% (VXN)
Russell 2000 (RUT) 802.35 5.44 0.68% 8.29% 23.96% (RVX)
CBOE Volatility Index (VIX) 17.44 -2.11 -10.79% NA

The coming week will be heavy on news which can move the market. The environment calls for increased awareness.   Earnings announcements will reach their peak for this quarter.  Spain and Italy will have debt auctions on Tuesday.    On Wednesday, the FOMC will release updated economic forecasts followed by a news conference by Ben Bernanke.  Both should give the markets more information about the possibility of QE3.  Trader expectations on the substance of these forecasts and news conference are potentially significant market movers.  Economic announcements will focus on jobs and housing.  The Commerce Department will release on Friday an advanced estimate of growth of gross domestic product for the first quarter.  Be nimble, be careful, be disciplined, and to not allow yourself to be caught unawares.

Remember:

“Chance favors the Prepared Mind.” – Louis Pasteur

This week’s economic news (All times are Eastern Time.  Dates and times are subject to change):

Monday April 23:

Economic:  No significant announcements.

Earnings:  BMO:  Check Point Software (CHKP), ConocoPhillips (COP), Eaton (ETN), Hasbro (HAS), Potlatch (PCH), Roper Ind (ROP), Sohu.com (SOHU), Tennant (TNC), Wolverine World Wide (WWW); AMC:  Ameriprise (AMP), Canadian National Railway (CNI), Crane (CR), IDEX (IEX), Netflix (NFLX), Rent-A-Center (RCII), Texas Instruments (TXN), United Stationers (USTR.)

Tuesday April 24:

Economic:  ICSC-Goldman Sachs Weekly Retail Store Sales – 7:45,  Redbook – 8:55, S&P Case-Shiller Home Price Index  – 9:00, New Home Sales – 10:00, Conference Board Consumer Confidence – 10:00, Richmond Fed Manufacturing Index – 10:00, Sate Street Investor Confidence – 10:00.

Earnings: BMO:  Alexion Pharmaceuticals (ALXN), Ashland (ASH), Anixter (AXE), Baker Hughes (BHI), Celanese (CE), Cit Group (CIT), Coach (COH), Ceradyne (CRDN), Carlisle (CSL), Delphi Automotive (DLPH), Federal-Mogul (FDML), Hershey HSY), Illinois Tool Works (ITW), Lexmark (LXK), McGraw-Hill (MHP), #m (MMM), Novartis (NVS), OSI Systems (OSIS), Paccar PCAR), Parker-Hannifin (PH), Ryder System (R), Reynolds American (RAI), AT&T (T), T. Rowe Price (TROW), United Technologies (UTX), Westinghouse Air Brake (WAB), Waters (WAT),  United States Steel (X);  AMC:  Apple (AAPL)ACE (ACE), AFLAC (AFL), Amgen (AMGN), AmSurg (AMSG), HomeAway (AWAY). CR Bard (BCR), Baidu (BIDU), Buffalo  Wild Wings (BWLD), Chicago Bridge & Iron (CBI), DeVry (DV), Edwards Lifesciences (EW), FMC Technologies (FTI), iRobot (IRBT), ITC Holdings (ITC), Juniper Networks (JNPR), Norfolk Southern (NSC), Panera Bread (PNRA), Questcor Pharmaceuticals (QCOR), Rogers Communications (RCI), Robert Half (RHI).

Other:  FOMC Meeting begins.

Wednesday April 25:

Economic:   MBA Purchase Applications – 7:00, Durable Goods Shipments and Orders – 9:30, EIA Petroleum Status Report – 10:30.

Earnings: BMO:  AutoNation (AN), Allegheny Technologies (ATI), Avery Dennison (AVY), Boeing (BA), Caterpillar (CAT), Credit Suisse (CS), Delta Airlines (DAL), Diebold (DBD), Dr Pepper Snapple (DPS), General Dynamics (GD), Corning (GLW), GNC (GNC), WR Grace (GRA), GlaxoSmithKline (GSK), Hess (HES), Human Genome (HGSI), Harley-Davidson (HOG), Eli Lilly (LLY), Lorillard (LO), Molex (MOLX)<Motorola Solutions MSI), NASDAQ (NDAQ), Nielsen (NLSN), Northrop Grumman (NOC), NuStar Energy (NS), Penske Automotive (PAG), Praxair (PX), Rockwell Automation (ROK), Sprint Nextel (S), SAP (SAP), Siemens (SI), Six Flags (SIX), Southern Co. (SO), Teledyne (TDY), Timken (TKR), Tupperware (TUP), WellPoint (WLP),  Zipcar (ZIP);  AMC:  Allegiant Travel (ALGT), Cheesecake Factory (CAKE), Crown Castle (CCI), Cirrus Logic (CRUS), CROCS (CROX), Citrix Systems (CTXS), Equifax (EFX), Graco (GGG), InterDigital (IDCC), Kaiser Aluminum (KALU), KBR (KBR), Kirby (KEX), Las Vegas Sands (LVS), Morningstar (MORN), NewMarket (NEU), Netgear (NTGR), O’Reilly Automotive (ORLY), Stericycle (SRCL), Tractor Supply (TSCO), Varian Medical (VAR), Williams Companies (WMB), Xilinx (XLNX).

Other: FOMC Meeting Announcement – 12:30, FOMC Forecasts – 2:00, FOMC Chairman Press Conference – 2:15.

Thursday April 26:

Economic:   Jobless Claims – 8:30, Chicago Fed National Activity Index – 8:30, Bloomberg Consumer Confidence Index – 9:45, Pending Home Sales Index – 10:00, EIA Natural Gas Status Report – 10:30, Kansas City Fed Manufacturing Index – 11:00.

Earnings:  BMO: Aetna (AET), AmeriGas (APU), Avnet (AVT), AstraZeneca (AZN), Brunswick (BC), Bunge (BG), Briggs-Stratton (BGG), Ball Corporation (BLL), Bemis (BMS), Bristol-Myers Squibb (BMY), Borg-Warner (BWA), Cabela’s (CAB), Celgene (CELG), Colgate-Palmolive (CL), CME Group (CME), Carters (CRI), Carbo Ceramics (CBR), Deutsche Bank (DB), Dow Chemical (DOW), Entergy (ETR), GATX (GMT), Goodrich (GR), Chart (GTLS), Starwood Hotels (HOT), Kellogg (K), L-3 Communications (LLL), Mead Johnson Nutrition (MJN), Noble Energy (NBL), Nu Skin (NUS), Omnicare (OCR), Old Dominion Freight (ODFL), Occidental Petroleum (OXY), Pepsico (PEP), Potash (POT), Reliance Steel (RS), Raytheon (RTN), Safeway (SWY), Time Warner Cable (TWC), Tyco (TYC), United Parcel (UPS), United Therapeutics (UTHR), Vulcan Materials (VMC), Whirlpool (WHR), Waste Management (WM), Exxon Mobil (XOM):  AMC:  Amazon.com (AMZN), Bally Technologies (BYI), Cerner (CERN), Seacor (CKH), Columbia Sportswear (COLM), Coinstar (CSTR), Deckers Outdoor (DECK), Dun & Bradstreet (DNB), Eastman Chemical (EMN), Expedia (EXPE), Gilead Sciences (GILD), Olin (OLN), PerkinElmer (PKI), Starbucks (SBUX), Synaptics (SYNA), Western Digital (WDC), Wynn Resorts (WYNN)

Friday April 27:

Economic: GDP – 8:30, Employment Cost Index – 8:30, University of Michigan/Reuters Consumer Sentiment – 9:55, ECRI Weekly Leading Index – 10:30.

Earnings: BMO: Autoliv (ALV), Covidien (COV), Chevron (CVX), DTE Energy (DTE), Honda M0otor (HMC), International Paper (IP), Merck (MRK), Novo Nordisk (NVO), Procter & Gamble (PG), Simon Property (SPG), Total SA (TOT),  VF Corp (VFC), Weyerhauser (WY), Zebra Technologies (ZBRA).

Monday April 30:

Economic:  Personal Income and Outlays – 8:30, Chicago PMI – 9:45, Housing Vacancies – 10:00, Dallas Fed Manufacturing Survey – 10:30, Farm Prices – 3:00.

Earnings :  BMO:  Armstrong World Industries (AWI0, Corn Products (CPO), Harman Internation (HAR), Holly Energy (HEP), Humana (HUM), Loews (L), Mercury General (MCY, Sohu.com (Sohu), Tenneco (TEN), Watson Pharmaceuticals(WPI);  AMC:  Andarko Petroleum (APC), General Cable (BGC), Sourcefire (FIRE), Flowserve (FLS), FMC (FMC), Jacobs Engineering (JEC), Luminex (LMNX), McKesson (MCK), Suncor (SU),  VIVUS (VVUS).

Frank Fahey is a mentor with DiscoverOptions, the educational arm of OptionVue Systems.  Inquiries should call 847-816-6610 or email info@DiscoverOptions.com.

Papale’s Market Pep Talk

Years ago, when I was on the floor of the CBOE, we used to read a column from the newspaper called “News of the Weird”.  It was a collection of strange and sometimes unbelievable news stories from newspapers and magazines from around the world.  It came out on Thursday in a local paper and it was the highlight of the day when things got slow.  Well, for some reason I was thinking about that old column and decided to see if it was still around.  Sure enough, it is still putting out stories like this:  A  68 year old Chinese woman from the farm country visited her son in the city and used an unprecedented 98 tons of water over two months of her visit.  Apparently, she was fascinated with the mechanism of a flushing  toilet.  That’s about 1 flush every five minutes.

There are many components that make up a successful trader.  Knowledge of the markets, technical or some specialized knowledge that yields an edge, and risk management  are just  few of the skills most profitable traders possess.  Many of these can be learned more or less from books or courses.  There is a ton of information out there about nearly every indicator or statistic known to man.  And it’s likely that, if has been measured and analyzed, some trader somewhere is using it as a tool or indicator.

Yet one skill seems to be present in most successful traders that does not involve mastery of a statistic or indicator.  It is the ability to focus and act rationally when markets and even others around them are in the midst of chaos.  For some, this is a natural trait but for others it had to be learned.  I have seen some very smart traders do very well in “benign” environments.  However, when chaos occurred and tough decisions had to be made, they froze and deviated from a rational, albeit painful, course of action such as taking a loss.  Just like learning the greeks, I believe the mental part of trading can be learned as well.  It may require a different type of “course work”, but none the less it can be done.  Part of it involves forcing yourself to sticking to a pre-determined.  The rest may require some practice and new skills in stress management.  But based on my experience, it would be well worth it.

Steve Papale is a mentor with DiscoverOptions, the educational arm of OptionVue Systems.  Inquiries should call 847-816-6610 or email info@DiscoverOptions.com.

The Prepared Mind 4.16.2012

Stocks had their worst week of the year.  When combined with the previous week’s losses, it was the first time in 2012 we have seen two consecutive weekly losses.   The losses followed two previous weeks of sideways movement.

Despite these losses, the SPX is up nearly 30% from October’s lows.   The SPX ended the week down 27.82 points or  -1.99% at 1,370.26.  This is within 3% of a three year closing high.   The Dow Jones Industrial Average closed down -210.55  points or – 1.61%.  The Russell 2000 (RUT) closed at 796.91 down 21.89  points or -2.67%.   The NASDAQ 100 (NDX) ended 8 consecutive weeks of gains with a loss of 63.51 points or – 2.30%.  The VIX confirmed the bearish sentiment by closing at 19.55% -  up 17.07%.

China and the Eurozone were major concerns last week.  Chinese GDP growth missed analysts’ estimate and raised the specter of a hard landing.  Spanish and Italian sovereign debt concerns were reflected in losses by equities in the financial sector.  This was highlighted by the losses in the Russell 2000.  The counterpoint to these concerns were better than expected earnings from JP Morgan and Wells Fargo.

Here is a capsule view of last week’s market behavior:

Index Close Weekly Change % Weekly % YTD Volatility of  Index
Dow Jones Industrials (DJIA) 12,849.59 -210.55 -1.61% 5.17% 17.67% (VXD)
S&P 500 (SPX) 1,370.26 -27.82 -1.99% 8.96% 19.55% (VIX)
NASDAQ 100 (NDX) 2,698.99 -63.51 -2.30% 18.49% 21.44% (VXN)
Russell 2000 (RUT) 796.91 -21.89 -2.67% 7.56% 26.11% (RVX)
CBOE Volatility Index (VIX) 19.55 2.85 17.07% NA

Last week’s weakness led to conjecture about the possibility of QE3.  The primary focus for the coming week will be on earnings.  The new earnings season is in full force, and financial analysts have tempered their earnings forecasts with cautionary warnings.  This raises the possibility of upside surprises.    Economic announcements will focus on Jobs and Housing.   Be careful, be disciplined, and to not allow yourself to be caught unaware.

Remember:

“Chance favors the Prepared Mind.” – Louis Pasteur

This week’s economic news (All times are Eastern Time.  Dates and times are subject to change):

Monday April 16:

Economic:  BuildFax Remodeling Index – 8:00, Retail Sales – 8:30, Empire State Manufacturing Survey – 8:30, Treasury International Capital – 9:00, Business Inventories – 10:00, Housing Market Index – 10:00, Housing Market Index – 1:00.

Earnings:  BMO:  Citigroup (C) , Gannett (GCI), Knoll (KNL), LG Philips (LPL), Mattel (MAT), McMoRan Exploration (MMR), Charles Schwab (SCHW);  AMC:  Brown and Brown (BRO), Equity Lifestyles Property (ELS), ICU Medical (ICUI), Lincare Holdings (LNCR), Packaging Corp. Of America (PKG).

Other: Cleveland Federal Reserve Bank Pres. Sandra Pianalto speaks about “Communication — a Key to Value-Added Supervision” at a “Day with the Commissioner” event in Lexington, Ky – 12:30,  St. Louis Federal Reserve Bank Pres. James Bullard delivers lecture on “The U.S. Economy and Monetary Policy” – 3:30.

Tuesday April 17:

Economic:  ICSC-Goldman Sachs Weekly Retail Store Sales – 7:45, Housing Starts – 8:30, Redbook – 8:55, S&P/Experian Consumer Credit Default Indices – 9:00,   Industrial Production – 9:15.

Earnings: BMO:  TD Ameritrade (TD), Comerica (CMA), Forest Laaboratories (FRX), Goldman Sachs (GS), W.W. Grainger (GWW), corp (USB), USG (USG), Harley-Davidson(HOG), Johnson&Johnson (JNJ), Coca-Cola (KO), Northern Trust (NTRS), Omnicom (OMC), Paccar (PCAR);  AMC:  Cree (CREE), CSX (CSX), DST Systems (DST), International Business Machines (IBM), Intel (INTC), Intuitive Surgical (ISRG), Linear Technology (LLTC), Packaging Corp. of America (PKG), Seagate Technology (STX), Stryker (SYK), United Rentals (URI), Yahoo (YHOO).

Wednesday April 18:

Economic:   MBA Purchase Applications – 7:00, EIA Petroleum Status Report – 10:30.

Earnings: BMO:  Abbott Laboratories (ABT), Amylin Pharmaceuticals (AMLN), Amphenol (APH), ASML (ASML), BlackRock (BLK), Quest Diagnostics (DGX), First Cash (FCFS), Freeport- McMoRan Copper a& Gold (FCX), First Republic Bank (FRC), Halliburton (HAL), Hanesbrands (HBI), Lufkin Industries (LUFK), Polaris Industries (PII), Piper Jaffray (PJC), PNC Financial (PNC), Textron (TXT);  AMC:  Albemarle (ALB), American Express (AXP), Badger Meter (BMI), Seacor Holdings (CKH), eBay (EBAY), F5 Networks (FFIV), Greenhill (GHL), Marriott International (MAR), Noble (NE), Plexus (PLXS), Qualcomm (QCOM), Select Comfort (SCSS), Stanley Black & Decker (SWK), VMware (VMW, Yum! Brands (YUM.)

Thursday April 19:

Economic:   Jobless Claims – 8:30, S&P Healthcare Economic Indices – 9:00, Bloomberg Consumer Confidence Index – 9:45, Existing Homes Sales – 10:00, Philadelphia Fed Survey – 10:00, Leading Indicators – 10:00,  EIA Natural Gas Status Report – 10:30.

Earnings:  BMO: Alliance Data Systems (ADS), Alaska Air (ALK), Alexion Pharmaceuticals (ALXN), Bank of America (BAC), Baxter International (BAX), Peabody Energy (BTU), Rockwell Collins (COL), EI DuPont de Nemours (DD), Danaher (DHR), Diamond Offshore Drilling (DO), Dover (DOV), EMC (EMC), GATX (GMT), Genuine Parts (GPC), Hubbell (HUB.B), Life Time Fitness (LTM), Morgan Stanley (MS), Nicor (NUE), Phillip Morris (PM), Pool (POOL), PPG (PPG), Sherwin-Williams (SHW), Snap-on (SNA), Syntel (SYNT), The Travelers Companies (TRV), Unitedhealth (UNH), Union Pacific (UNP), Verizon (VZ), WESCO (WCC);  AMC:  Altera (ALTR), Advanced Micro Devices (AMD), CR Bard (BCR), BJ’s Restaurants (BJRI), Chubb (CB), Chipotle (CMG), Capital One (COF), E-TRADE (ETFC), Gardner Denver (GDI), Kinder Morgan (KMP), MB Financial (MBFI), Microsoft (MSFT), Robert Half (RHI), SanDisk (SNDK), Tempur Pedic (TPX), Valmont (VMI), Wynn Resorts (WYNN).

Friday April 20:

Economic: ECRI Weekly Leading Index – 10:30.

Earnings: BMO: American Electric Power (AEP), AO Smith (AOS), Canadian Pacific Railway (CP), Honeywell (HON), Ingersoll-Rand (IR), Johnson Controls (JCI), Kimberly-Clark (KMB), Manpower (MAN), McDonald’s (MCD), Schlumberger (SLB), Uner Armour (UA).

Monday April 23:

Economic:  No significant announcements.

Earnings:  BMO:  Check Point Software (CHKP), ConocoPhillips (COP), Eaton (ETN), Hasbro (HAS), Potlatch (PCH), Roper Ind (ROP), Sohu.com (SOHU), Tennant (TNC), Wolverine World Wide (WWW); AMC:  Ameriprise (AMP), Canadian National Railway (CNI), Crane (CR), IDEX (IEX), Netflix (NFLX), Rent-A-Center (RCII), Texas Instruments (TXN), United Stationers (USTR.)

Frank Fahey is a mentor with DiscoverOptions, the educational arm of OptionVue Systems.  Inquiries should call 847-816-6610 or email info@DiscoverOptions.com.

Papale’s Market Pep Talk

Sine Wave

I remember back in school when I learned about sine waves.  I cannot remember what the subject was exactly, but I still have the illustration of a gradually ascending and then descending line across the graph which looked much like a roller coaster.  I have not thought about sine waves in a while but maybe after seeing a chart of the market it triggered my memory bank.  Wish I could remember what class I learned sine waves in.  Or more importantly what grade I got.

I read an interesting poll the other day regarding challenges for new traders.  There were many opinions and thoughts on this, all of which were correct.  They included 1)  focusing on the trade and not on the money, 2) risk management, 3) panicking at the worst time, 4) no workable trading plan, 5) not being properly capitalized and 6) poor entry or exit rules.

There is no doubt that new and experienced traders have challenges that they must overcome in order to be successful over time in this business.  Each trader has his own particular area or areas in which he has to work on.  In my experience working with traders, it has often been the trader’s emotions that need to be controlled.  It is easy to back trade and test with fake money or small money.  But as the trader begins to increase his trading capital, the emotional stakes go up and if not managed, can lead to poor trading decisions.

As I said, all of these challenges are real for nearly all traders at some level.  There is a lot of free information out there that will show the mechanics of how options work.  But overcoming some of the challenges listed above often requires a mentor or at least another person who has the experience and objectivity to identify and point out areas that need work.  This is what I would call the “soft” part of learning that goes beyond parity graphs and mechanical rules.  But often this is what can turn an average or losing trader into a winning and successful one.

Steve Papale is a mentor with DiscoverOptions, the educational arm of OptionVue Systems.  Inquiries should call 847-816-6610 or email info@DiscoverOptions.com.