Trader Mindset

Start with long-dated Call options and turn them into a Bull Call spread by selling the upper strike when the underlying reverses down. Cover that leg when the vol crashes. You can create other structures too, such as condors or butterflies all based upon a core holding of long dated calls.

If you put every dollar you have to work, you don't give yourself any room when Murphy's Law kicks in. If you keep some dry powder, you'll be able to able to withstand some shocks to the system, as well as have capital to deploy when something falls into your lap.

Michael Martin interviews options trader and portfolio manager Hari Krishnan on the current environment and how traders can position themselves with options to capture greater profits. Krishnan is the author of The 2nd Leg Down: Strategies for Profiting after a Market Sell-Off.

Crypto investing is missing some key components that an investor's are used to in trading equities, options, and futures. In this episode, Michael Martin discusses what's missing and why you should measure 8 times and cut once in the crypto space.

With the likelihood of the fed tightening, investors who rely on certain instruments for income are in a tough spot. They can use options to transfer the risk and hold their current positions.

Key inflection points can happen with the fundamentals as well as the technicals.

I've seen too many traders try to trade something on a hunch because they thought earnings were going to be a blowout. It's much more complicated than that. There's the EPS, top-line growth, expenses, one-time charges, and forward-looking statements that get reported. I've seen companies beat by $0.02 per share, but the forward-looking statements are bearish or cautious and the stock sells off. Trading on hunches is a gamble: you don't know the probabilities nor the expected values. If you can't model it, you can't trade it.

If you believe the adage that "good trading is boring," then system trading is boring to the nth degree. There are days, sometimes weeks, that I don't generate an ORDER, never mind a trade. Then there are times when there are so many orders, you have to write them all out first in a general ledger and number the tickets. On the flip side, system trading is also very peaceful because I'm able to scan thousands of instruments in less than a minute and not worry that I'm missing out of an opportunity. That is a mental advantage if nothing else.

Focus on your process and stay out of the results - you're powerless over them. All you can do is control the "controlables" - that is, your behavior.

Seasonal commodity spreads can be very a reliable type of trade for your portfolio. While commodities are surely not for everyone, commodity spreads are considered "hedged" because the trader is simultaneously long and short the same commodity but in different expiration months. A great source of information on spreads is at Moore Research Center. You can find them on the internet at www.mrci.com.