Capitalizing On Added Expiration Dates

Those of you who are in the VIX and Index ETF service may have noticed that I have been quicker to take profits over the past month. Typically, I would have looked for at least a 300% return before entertaining the idea of entering a position and ideally 400% but I have changed my approach to this strategy and have been willing to take setups as low as 200% given the right circumstances. I made this change starting March 1st for a few reasons and so far it has been working out quite well. 

After reviewing my entry history, I noticed that a very high percentage of the option entries I posted in the service move up to at least 100%, and often very quickly. A smaller percentage of those entries have been hitting the ideal target north of 250%. I have found this to be even more profound in the recent market conditions that we have seen over the past year or so.  

In the past, my strategy would have been to take half the gains at 100% and then let the remainder run looking for that 300-500% gain. These larger 300-500% winners have been harder to obtain in recent months which had made it harder to progress overall. Because, however, the percentage of 100% winners had been fairly high, I have been keeping a much tighter leash on these trades over the past month and have been happy to take that 100% quickly and run, so to speak. 

One of the key is differences aside from the overall market conditions is that we now have the addition of options that expire every day on the Nasdaq and three times a week on the Russell 2000. This is providing us with ALOT more opportunities for high-probability setups that can target 200-300% upon entry. 

Before these thrice weekly and now daily options were available we needed two things to make one of these options trades make sense. We needed a high-probability setup AND that setup needed to land on the correct day of the week for the Friday expiration to make sense. Now with these added expiration dates we just need the High probability setup and there is typically a strike that will work out. This has made finding good setups much easier and more frequent. Combining these more frequent setups with quick profit-taking and proper risk management can lead to a very attractive system. 

My goal is to get on average 4 good setup per month, with some months having more and some having less, but ideally, I would like to get 4 good setups per month. Since March 1st through today I have been able to achieve this as I posted six setups with five winners with just one loss in the VIX and Index ETF service. Below are those trade entries:

March 1st UVXY Puts Gained over 100%
March 9th QQQ Calls Gained over 100%
March 17th QQQ Calls Lost 100%
March 22nd VXX Calls Gained over 100%
March 24th IWM Calls Gained over 100%
April 3rd IWM Puts Gained over 300%

Not every trade is going to be a winner and there will be some months that do not go as well as what we have seen here, but again, the goal is to take high-probability setups and take winners quickly while we have the opportunity and not let profits slip away. A high winning percentage with managed risk while compounding gains is the goal here. Given the current market conditions, this is the approach I am planning to take until the market dictates otherwise. 

The addition of the daily option expirations and the wider range of entry returns has allowed for much more consistent entries and more frequent setups in the service. I know there was a concern for some who had tried the service in the past. While I cannot control the market and there will certainly be some weeks where there is not a high probability setup, the daily option expirations have certainly helped to increase the odds of getting a setup. 

There is still a two-week free trial to the service so if you have not been around for a while come back and join us to see how things have changed, or if you are have never tried the service and would like to see some high probability setups presented via easy options workups come give the room a try. 

Michael Golembesky is a senior analyst at ElliottWaveTrader covering US Indices, the US Dollar, and the VIX. He contributes frequently to Avi's Market Alerts service at EWT while also hosting his own VIX Trading service.