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Index Settlement Prices
If you've ever traded the major U.S. stock index options, you'll notice that trading stops on Thursday but the settlement price is calculated the next day. The way it is calculated can be confusing. For example, last Friday, the Russell 2000 Index (RUT) settled at 1101.49 but the range of prices during the day was from 1079.23 to 1099.44.
The settlement price was above the high of the day!
How was that possible?
It's due to the way the settlement prices are calculated. If you go to the CBOE's web page for the Russell 2000 Index Options, you'll see see a section titled “Settlement of Option Exercise.” This says:
“… The exercise settlement value (RLS) is calculated using the first (opening) reported sales price in the primary market of each component security on the last business day (usually a Friday) before the expiration date.”
If you try to lookup the settlement price during the day of settlement, you'll find that the RUT data takes a long time to post. That's because they have to wait for all 2000 stocks to trade, which can take hours.
REPLAY: Round Table with Joe Cusick
Joe Cusick, from TradingBlock (member FINRA | SIPC), spoke about “Swing Trading with Option Spreads.” Joe showed how he finds stocks with potential directional plays and constructs vertical spreads to take advantage of his directional opinion.
Enjoy the replay!
REPLAY: Round Table with John Locke
John Locke, from Locke In Your Success, spoke about “M3 – The Road to Master.” John showed how his M3 butterfly trade works and stepped through an example trade ending on Oct 9th. This was similar to John's $600,000 trade that he closed for a +$40,000 profit, despite the large moves in the market.
Enjoy the replay!
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The Round Table with Joe Cusick on Thursday Oct 16th
Professional trader and option educator Joe Cusick from TradingBlock (member FINRA | SIPC), presents “Swing Trading with Option Spreads” on Thursday Oct 16th at 4:30pm ET. Joe will show you the do's and don'ts of two vertical option spread strategies:Bull Call and Bear Put Spreads. Learn when to deploy each defined-risk strategy and how to manage the position once you're live in the market.
Click here to register for this free event
We will record this event and post it in our free members area.
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We hope to see you in the webinar on Thursday. It should be a good one.
Sheridan Mentoring Waives Annual Fee for Pre-2012 Students
I wrote about Sheridan Mentoring implementing an annual membership fee a few days ago. The reaction was very intense across the various forums inside of Sheridan Mentoring and outside, including the Capital Discussions forum. Dan Sheridan must have been paying attention to the reaction because did an about face and sent an email to mentoring students amending his policy.
Dan said if you are a mentoring student who started prior to 2012 and were promised lifetime access, just email Sheridan Mentoring at info@sheridanmentoring.com and they will waive the fee.
That's a fair offer from Dan.
Please join us in our forums to have an uncensored discussion about the fee or any other trading topic!
Sheridan Mentoring Implements Annual Fee
Sheridan Options Mentoring is implementing a new administration fee. Previously, mentoring students had access to the member website without paying additional fees. Starting November 1st, all Sheridan mentoring students are required to pay the $300 annual membership fee.
Dan Sheridan had thought about charging a fee many years ago. We had a discussion about it in the Sheridan Forums back then and Dan decided to scrap the idea. The idea is back and will be enforced starting next month.
The Round Table with John Locke on Thursday Oct 9th
Professional trader and option educator John Locke, presents “M3 – The Road to Mastery” on Thursday Oct 9th at 4:30pm ET. John will show you a market neutral trading system that performs well in most market conditions. The M3 is the culmination of several years of tweaking John's original bearish butterfly.
Click here to register for this free event
We will record this event and post it in our free members area.
Get your free login here if you don't have one already.
Tom's Trading Update for September 19, 2014
EURUSD sold off another 90 pips so our futures options position with the 6E contract lost some ground; however, the delta is still about -8 so no problem for now. New BWB trade in SPX OCT 17 expiration. The OCT 10 and DEC expiration trades are fine.
Enjoy the video!
Tom's Trading Update for September 18, 2014
The market recovered after the FOMC meeting announcement. 6E futures options are down but have recovered about $1000 of losses and are poised for a winner. I just have to wait it out and hope nothing makes the EURUSD go further South.
The SPX trades are doing great. +$1100. I raised the expiration profit line on the Oct 11th expiration and I am looking to add more trades on expiring in 27-35 days tomorrow.
Enjoy the video!
REPLAY: Round Table with Greg Harmon
Greg Harmon, from Dragon Fly Capital, spoke about “Using Technical Analysis to Design Winning Options Trades.” Greg showed different setups and how he uses technical analysis to confirm his opinion of a stock in a trend and to create his price targets.
After the price targets are established, Greg looks at the options chain to see how he is going to play the trade. Greg manually reviews 1,000 stock charts every week in his search for the ten best trading opportunities for his premium subscribers.
Enjoy the replay!