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Closed On Wednesday the Chicago Mercantile Exchange (CME) made an announcement that may surprise many who are not in the trading business; however, for those of us that are here every day, it is no surprise: the CME will close nearly all of its trading floors/pits. From 1848 to 1992, all trading was done by humans in an open-outcry fashion. But as computer speed followed Moore's Law, which is the observation that over the history of computing hardware, the number of transistors in a dense integrated circuit doubles approximately every two years, humans became less necessary. It only took 23 years to displace the prior 144 years of open-outcry trading. Many of us that traded in the pits and were there for the implementation of electronic trading in 1992 are not surprised. I began my trading journey in 1989 and loved it. When electronic trading started three years later, it was rather clunky and slow to be adopted. That all changed in 1997 when the first mini-sized all electronic contract, the ES (mini S&P500), was quickly adoption and therefore rapidly increased volume. This eventually led to where volume is today: 99% of all trades at the CME are electronic. From the CME press release... As open outcry futures trading has fallen to just one percent of the company's total futures volume, CME Group today announced it will close most of its futures trading pits in Chicago and New York by July 2, 2015. The floor-based S&P 500 futures market, which continues to provide an important venue for trading the underlying futures contract for the open outcry S&P 500 options on futures contract, will remain open on CME Group's Chicago trading floor. Options on futures contracts, which continue to trade actively on both the floor and the screen, will remain open on both trading floors except for the DJIA ($10) and NASDAQ-100 open outcry equity index options markets which are designed to deliver into floor-based futures contracts. With the exception of the S&P 500 futures and options on futures pits which will remain open, equity index futures pits and the DJIA($10) and NASDAQ-100 options pits will close following the expiration of the June 2015 contract on June 19, 2015. All other futures pits will close on July 2. In addition, in Chicago, all options pits will be located on a single floor in the company's Financial Room by September. At least the S&P500 pit will still be open, but sadly most others will close. This sadness, however, is temporary indeed as I transitioned to electronic trading quite a long time ago. Progress and computer speed can not be stopped. Trade well and follow the trend, not the perma-bull OR perma-bear "experts." Behold the age of infinite moral hazard! On April 2nd, 2009 CONgress forced FASB to suspend rule 157 in favor of deceitful accounting for the TBTF banking mafia.

The markets had a choppy day in comparison to recent trading sessions. While the last hour was very volatile, it was a chop fest prior to the last trading hour. At the end, we had a strong ramp to new highs of the session, only to slam down off of the ECB news on Greece. On that news the markets slid on heavy volume, the COMP and SPX ended up closing in negative territory. Seeing how we were set to close, it looks like we have a chance to the upside today. Bear in mind that Crude got hammered yesterday, and we barely went lower in the markets. I am looking to the upside here and will be watching the 2050 and 2064 price levels in the SPX closely. Let's hope we push higher and get some momentum behind us. Otherwise, it's back on down yet again. Read More

TECHNICAL DATA ES 2042.75/2032.75 POC 2039.50 YM 17,653/17,585 NQ 4228.75/4202.75

Typically our signals focus on two main things: implied volatility mean-reversion (event plays) and directional signals. The time horizon for these trades are typically just a few trading days. But is it possible to use options much the same way a day trader scalps stocks or ETFs? You certainly can, but there are some very important criteria that you must take into account before you do this type of trading. There is an account designation called a Pattern Day Trader (PDT). FINRA rules define a "pattern day trader" as any customer who executes four or more "day trades" within five business days, provided that the number of day trades represents more than six percent of the customer's total trades in the margin account for that same five business day period. The main rule is that in order to engage in pattern day trading you must maintain an equity balance of at least $25,000 in a margin account. The required minimum equity must be in the account prior to any daytrading activities. Three months must pass without a day trade for a person so classified to lose the restrictions imposed on them. Long story short, if your net liquidity falls below $25,000, you will be locked out of your account for 90 days. Good thing to know. Given a tight bid to ask spread, you could use a deep in-the-money option as a "stock replacement" or an at-the-money option that will move half as fast as the underlying. You will most likely have a much more favorable bid to ask spread with the ATM options. Read More

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IMPORTANT NOTICE: The risk of loss in trading futures, options on futures, stocks and stock options can be substantial and is not suitable for all investors. Past performance is not necessarily indicative of future results. Trading Advantage LLC only provides educational services. By accessing any Trading Advantage content, you agree to be bound by the terms of service. Click here to review the terms of services. The hypothetical signal results shown above represent signals offered in real time in the training room. A signal does not get posted unless there is a reasonable likelihood that if an order had been placed it would have been executed. Further, adjustments are made to simulate the costs of commissions. Past performance is not necessarily indicative of future results. The posted information is shown for educational purposes only and no signal shown was actually executed as a trade. Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not actually been executed, the results may have under- or over-compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those talked about in our site.

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