Sunday, September 07, 2008

Important

Dear Fellow Options Traders :

To be fair, I believe you should read the following news articles before you read about my trades on earnings gapping analysis technique. Thank You.

At least 218 here have off-the-shelf degrees - 29 Aug 08

Uni lashes back at news report - 5 Sep 08

Yours Truly,

Tony Chai

11 comments:

Anonymous said...

Hi Tony,

So how you think about this?
Do you think Clemen has his knowledge in options well?
If somebody is full of options knowledge, it is doesn't matter whether he is a PhD holder or not.

regards,
Eric

PW said...

Yeah I read about that on another site. At least your putting it out there for people to see. It's unfortunate but from what I can see people are still making money off of what is being taught. But then there are also the people who aren't making money. Who knows, geez I'd like to be able to trust people nowadays.

Tony Chai said...

Hi :

Frankly, Earnings Gapping Analysis is about predicting what's the price movement is going to be like after earnings. When you start to predict an event to happen, there's always that 50/50 chance in it. In this technique, a stop loss is almost impossible to materialize because if the stock price gapped in the opposite direction to your position, your premium would most probably be wiped out. You may set a stop loss before the earnings announcement, but I believe most of the grads would carry their position into the earnings announcement to "try their luck".

I admit that I still trade this technique, but very scarcely nowadays. If the premium are too overly inflated, or when the movement has already been priced in before earnings announcement, or I do not have enough signals to pin-point a probable direction, I would not enter the position. Every time I enter a earnings gapping analysis trade, I treat every trade as a potential losing trade because I know it carries a 50/50 chance. It also reminds me not to over-trade no matter how confident I am about the probable direction of gapping after earnings.

In my opinion a better trading technique would be to follow the trend of the stock or index instead of predicting how they are going to move. Mr Ronald Lee from StreetSmartOptions.com is one of them, where he scan for potential stocks which match the candlestick patterns, technical analysis criteria before determining his entry and exit points. He let the market or stock price determine the direction themselves & if he was wrong, his stop loss will reduce his risks exposure. But when he was right, he would trail his profits higher while adjusting his stop loss higher. In earnings gapping, there's very little room for you to set a stop loss & trail your profit after a gap up or down after earnings, in the correct direction of course.

Yours Truly,

Tony Chai

Online Options Trading said...

Does this problem affect Clemen Chiang's popularity in Singapore ?

Tony Chai said...

Hi :

I believe somehow it would coz this would affect his integrity.

But I think the important thing is whether this technique is able to grow your income. If it can't, it's better to look for a better one & trade this technique with money you are very sure you can lose, sparingly, of coz.

Regards,

Tony Chai

Anonymous said...

I think Clement Chiang went into hiding.
HE send a note that he's going off to do another PhD (with some Australia University). Makes me wonder why bother if you already have one that is creditable ?

To be honest, I felt cheated by him. I even subscribe to his Once-In-Blue-Moon services and it is full of errors, and not timely update.

Tony Chai said...

Hi :

In this precipitous market condition, it's best that you don't trade earnings gapping at the moment.

If you really want to trade it, always remember it carries a 50/50 chance element.

Take care,

Tony Chai

Anonymous said...

Tony,

Do your have an email add?

Rgds,
your classmate

Tony Chai said...

Hi :

It depends on the stocks that I wanted to trade earnings gapping analysis on.

If I knew (from experiences & from what's recorded in my trading journal) that a stock would not move much in the days leading to earnings announcement, I would buy 1-2 days earlier to take advantage of cheaper premium still not inflated by implied volatility.

For stocks where prices were very volatile in the days leading to earnings announcement, it's better to buy the premium on the eve of earnings. BUT, such options would carry a pricey premium due to such erratic IV thus you MUST balance whether the price gapping magnitude would be huge enough to cover the expensive premium that you would risk. Don't forget the stock price need to gap in the correct direction after earnings too.

There were times when the implied volatility inflated the premiums of option & I would sell them for a profit even before the earnings announcement.

Regards,

Tony Chai

Almadury said...

there is no fixed formula to success in stock market.

The winnwer is Mr. Market.

Anonymous said...

I agree with anonymous..i wrote to Freely School that "Dr" Clement should send an email to explain the whole situation to his students but i was immediately barred from the Freely Google group! I was angry from their reaction just cos i emailed them to ask for clarification. That explains a great deal abt them to me. Period...