Best Short-Term Trade
September 25th, 2004
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
S&P 500 Advance minus
Decline Volume
|
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 |
|
|