Vlad Karpel, Founder of Tradespoon.com Talks Option Strategies
Vlad Karpel is the Founder of Tradespoon.com and was a special guest on Benzinga's #PreMarket Prep to share wisdom he has accumulated through his 15 years of experience in building a statistics-driven stock picking system.
Jumping right in to it, Karpel was asked what his trading strategy is going in to an uncertain environment.
“In a low volatility environment, we are looking to buy debit spreads,” Karpel said. “Since there is no volatility in out-of-the money call spreads, the risk to reward ratio is not there.”
Karpel is looking at the transportation and conglomerate sector to buy July credit spreads. Karpel favors buying deep-in the money calls or put spreads. By using this strategy, if a stock is little changed as the option approaches expiration, the option is still in the money.
In terms of airlines, Karpel is bullish Spirit Airlines (NASDAQ: SAVE) and Delta Air Lines (NYSE: DAL). among others. Karpel believes that long-term, transportation is a good bet despite short-term concerns stemming from a new round of violence in Iraq that may have negative implications in the global oil market.
The consumer discretionary sector has been on Karpel's bearish radar, specifically Kohl's (NYSE: KSS) and J.C. Penney (NYSE: JCP). Karpel recommended his clients to initiate a deep-in the money put spread.
When it comes to the overall market, Karpel has a bullish view but believes that small corrections will be a recurring theme for the remainder of 2014.
Karpel shies away from some of the momentum-names such as Facebook (NASDAQ: FB), Priceline Group (NASDAQ: PCLN), Twitter (NYSE: TWTR), among others.
Karpel finds these names too volatile, especially lately. However, Karpel does follow these momentum names and pays attention whenever there is a dip. If Karpel is bullish on momentum stock on a one-year or more time frame, Karpel does recommend a position.
For those traders who do trade these momentum names, Karpel would recommend selling a call or put spread that is one deviation away. Naturally, Karpel notes that implementing this strategy is only intended for sophisticated investors.
Check out the video below for a full recap of Vlad Karpel's interview on #PreMarket Prep:
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