If you feel like your trading has been struggling lately and you keep getting stopped out, well here is a trade that has been working really well courtesy of our friends at CMLViz.
Alibaba is a stock that has been bouncing around lately and the CMLViz software has found a long volatility trade that is performing extremely well.
While the stock has essentially gone nowhere in the last 6 weeks, a volatility play of buying a 50 delta straddle in the options that are closest to five days from expiration has returned a whopping 408%.
The trade has a 10% stop limit and never takes exposure to earnings.
Here are the results of the trade:
Notice that this has triggered a trade 20 times in the last six-weeks. This is a fast moving, re-adjusting straddle. The idea is simple:
Take well bounded risk, small, and direction-less, and let a tweet, a news headline, an Apple headline, a day of pessimism or a day of optimism, whatever — move the market, as it has so often in this new volatility regime.
While past performance is no gaurantee of future performance, this trade certainly looks promising.
Check out CMLViz for more trade ideas like this one.
Trade safe!
Disclaimer: The information above is for educational purposes only and should not be treated as investment advice. The strategy presented would not be suitable for investors who are not familiar with exchange traded options. Any readers interested in this strategy should do their own research and seek advice from a licensed financial adviser.
