- Options Trading

Nasdaq in a month?

Up

The same as now

Down

I don't know

 
Best Short-Term Trade
September 25th, 2004

Go to Best Trades Archive Go to Best Trades History

This "Short-Term Trade" was based on our volume indicators.

This "best Short-term trade"
is a continuation of the previous best trade,
where we left a QQQ Put position open. 

NOTE: We discuss our "best trades" here mainly for educational purposes. The trading examples we illustrate are based principally on our volume indicators. Our main intent is to show you how you can apply our volume indicators and to explain the specific correlations that exist between volume surges and the movement of the indexes. We do not mean to imply that you should follow our exact trades, but rather wish to suggest that you may make use of our volume analytics to develop your own trading style. We also urge you to paper trade before committing your money to the markets.

Security Return
Put #1 (QQQ Nov. - QQQWI) -17.24%
Put #2 (QQQ Nov. - QQQWI) 0.00%
Put #3 (QQQ Nov. - QQQWI) +26.32%

Total Profit:

+$1,250
 

NASDAQ 100 Indicator
Nasdaq 100 stock chart

S&P 500 Advance minus Decline Volume
Nasdaq 100 stock chart

Should I Trade Options?

Only very experienced traders should trade options because of the high risk involved. You can always trade index shares instead of options and still make a decent profit, but returns will not be as large.

Why buy expensive options that will expire in 2-3 month?

Even though next months Call & Puts options are more expensive, they tend to be less volatile in reaction to market swings, and they don't devalue as quickly as a current month options. By trading options that are at least one month ahead, you can protect yourself from unforeseen short-term fluctuations in the market. Also, if the uptrend continues on a long-term basis, one can hold these options for a longer period as they will substantially substantially in value.

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
Buy Put #1
09/09/2004
Was left opened in previous
"Best Trade"
12:30 - 14:15: As the market moved higher, it generated a very large selling VMA surge to the upside shortly after 13:30.
Buy Put #2
09/10/2004
Was left opened in previous
"Best Trade"
14:00 - 16:00: The ensuing late-day rally generated a large amount of selling volume to the upside.
Buy Put #3
09/17/2004
Was left opened in previous
"Best Trade"
Because we are not convinced that the market has fully compensated for all of last week’s (and to a lesser extent, this week’s) output of selling volume, we see the possibility of a move lower in the short-term (i.e., over the coming week). In addition, we point to the large output of selling volume at the end of the day.
Sell Put #1, 2, 3
09/24/2004
11:30 - 12:30 As the market moved down it generated the largest buying VMA surge of the day

These are the trades which netted the returns shown above:


Date
Trade Strike Expiration Contracts Contract
Price
Amount Profit
09/09/2004 Buy Put #1 $35 Nov. - QQQWI 75 $1.45 -$10875  
09/24/2004 Sell Put #1 $35 Nov. - QQQWI 75 $1.2 +$9000 -$1,875
09/10/2004 Buy Put #2 $35 Nov. - QQQWI 100 $1.2 -$12000  
09/24/2004 Sell Put #2 $35 Nov. - QQQWI 100 $1.2 +$12000 $0
09/17/2004 Buy Put #3 $35 Nov. - QQQWI 125 $0.95 -$11875  
09/24/2004 Sell Put #3 $35 Nov. - QQQWI 125 $1.2 +$15000 +$3,125

Total:

1,250
(3.6%)

 

2004
Date Indicator
March 14, 2006 QQQQ Options
March 10 2006 Trading QQQQ
October 12, 2004 Options Trading
September 25, 2004 QQQQ Options
September 18, 2004 QQQQ Options Trading
September 10, 2004 QQQQ Options
September 9, 2004 Trading  Options
September 7, 2004 QQQQ Trading
September 2, 2004 QQQQ
August 31, 2004 QQQQ Options
August 19, 2004 QQQ
August 18, 2004 Options Trading
August 15, 2004 QQQQ Options Trading
August 5, 2004 QQQQ Options
August 3, 2004 QQQQ
July 31, 2004 Trading QQQQ Options
July 21, 2004 QQQQ Options
July 14, 2004 Trading QQQQ
July 13, 2004 Options Trading
July 1, 2004 QQQQ Trading
June 23, 2004 QQQQ Options
June 20, 2004 Options Trading
June 6, 2004 QQQQ Options Trading
May 30, 2004 QQQ Options
May 25, 2004 QQQ Trading
May 20, 2004 QQQQ Options Trading
May 16, 2004 QQQ
May 12, 2004 Options Trading
May 09, 2004 QQQQ
April 29, 2004 QQQQ Trading
April 22, 2004 Options Trading
April 18, 2004 QQQQ Options Trading
April 10, 2004 QQQQ Options
April 6, 2004 S&P 500 Options
March 28, 2004 Options Trading
March 14, 2004 QQQQ Options
March 7, 2004 QQQQ Options Trading
February 29, 2004 Options Trading
February 22, 2004 QQQ
February 15, 2004 QQQQ Trading
February 8, 2004 QQQQ
February 1, 2004 Options Trading
January 25, 2004 QQQQ Options Trading
January 18, 2004 QQQQ
January 12, 2004 QQQQ Options

BOW Newsletters
2002:
NDX and SPX
2003:
S&P 500
2004:
QQQQ and S&P 500
2005:
QQQQ Options
2006 (first part): -
QQQQ Options Trading
2006 (second part): -
QQQQ Options Trading
2007:
QQQQ and SPY Options
2008:
QQQQ and SPY
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