| Our short-term
index options trader traded QQQ options for this
week’s "best trade of the week", but could instead have
traded NASDAQ 100 index shares or options using the same
method. This trade was based on our volume indicators
and our Market Commentary.
This week's
"best trade of the week"
is a continuation of the previous
week’s best trade,
where we left a QQQ Put position open.
These trades were closed
with 44%
and
56% of profit.
NOTE: We discuss our "best trades of the week"
here mainly for educational purposes. We don't
recommend that you follow our exact trades. Instead, we
urge you to develop your own trading style and to paper
trade before committing your money to real trades. Our
volume analytics will help you do this.
For this week’s "trade of
the week", "Buy QQQ Call
#1" is opened
in order to close it later with profit if the index
moves in our favor.
|
Security |
Return |
| Put
#3 (QQQ March) |
+44.00% |
| Put
#4 (QQQ March) |
+56.52% |
|
Total Profit: |
+$7,200 |
Even though the trades shown above were not entirely
without risk, they resulted in a
profit of $7,200
In the following, we would
like to show you the motivating factors that led us to
take above trades. For this purpose, we have created
what we call a 'Table of Trade
Motivators':
|
Trade |
Volume Motivation |
Market Commentary
on Members Home Page during the trade |
Buy Put #3
01/15/2004
Was left opened
last week |
During the market's
late morning and early afternoon advance it ran into
a very large selling VMA surge to the upside. This
selling volume surge began at 11:30, but quickly
came to a peak at 12:45. |
The fact that the
market has not reacted, in the short-term, to the
accumulating amounts of selling volume to the
upside leads us to believe that there is now a
chance for there to be a mid-term correction,
not just a short-term correction. |
Buy Put #4
01/16/2004
Was left opened
last week |
Intraday, a large and
broad selling VMA surge to the upside was seen at
12:45. This surge was substantially bigger than any
seen in quite some time. |
The fact that the
market has not seen a pullback in this situation
leads us to believe that a more substantial
correction may be in the offing. |
Sell Put #3, 4
01/28/2004 |
Shortly after 14:00,
the market began a swift decline throughout the rest
of the afternoon. During this decline the market
generated a very large amount of buying volume
to the downside, which was focused in two peaks, one
at 14:45 and the other at 15:45, shortly before
closing. |
As a result, we
expect that the market will likely continue to
move higher in the mid- and long-term since we
have not seen any significant signals to suggest any
change in their current bullish up-trend. |
Buy Call #1
01/29/2004
Left opened |
During the market's
descent, it encountered several buying VMA
surges to the downside at 10:15, 11:45 and at 13:45. |
We still expect that
the market will continue to move higher in the mid-
and long-term as it continues in its bullish
up-trend. |
The principles discussed above also
apply when trading the NASDAQ 100, the
S&P 100, the
Dow Jones, as well as other indexes.
Following
is a detailed list of the actual trades made by our
investor.
These are the trades which netted the returns shown
above:
Date |
Trade |
Strike |
Expiration |
Contracts |
Contract
Price |
Amount |
Profit |
|
01/15/2004 |
Buy Put #3 |
$38 |
March |
60 |
$1.25 |
-$7500 |
|
|
01/28/2004 |
Sell Put #3 |
$38 |
March |
60 |
$1.8 |
+$10800 |
+$3,300 |
|
01/16/2004 |
Buy Put #4 |
$38 |
March |
60 |
$1.15 |
-$6900 |
|
|
01/28/2004 |
Sell Put #4 |
$38 |
March |
60 |
$1.8 |
+$10800 |
+$3,900 |
|
01/29/2004 |
Buy Call #1 |
$37 |
March |
100 |
$1.3 |
-$13000 |
|
|
Total: |
+$7,200
(+50.0%) |
|
