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"Best Trade" Newsletter (November 25, 2005) - open trade
11/25/2005
In the following example, we have based our QQQQ options trades on S&P 500 index volume indicators and on advance / decline indicators. Using the principles outlined below, you may wish to trade options on the SPDRs (SPY), ^SPX, DIAMONDS Trust, Series 1 (DIA), as well as on other underlies that generally tend to move in concert with the S&P 500 index. It is also conceivable that an analysis similar to the one shown below could be used to trade options based on the NASDAQ 100, Russell 2000, and other indexes. Below you will find a Table of Trade Motivations and a chart showing the trades, including detailed trade calculations. This best Short-term trade is a continuation of theprevious best trade, where we left a QQQQ Put position open. For this Best trade, A trade (Buy Calls) is opened in order to close it later with profit if the index moves in our favor. | Chart 1: | Options trades on the S&P 500 index modulated volume. November, 2005. |  |
In Table 1 - a ''Table of Trade Motivators'' - we show the motivating factors that led us to take the above trades. Table 1: Table of Trade Motivators | Date | Trading Decision | Motivation | | 11/2/2005 | | Selling VMA surge: On November 2, 2005 we noted a high-magnitude selling volume surge. The (2/20) PVO was 13.7%, indicating that that the average volume was more then 14% higher than it had been for the previous 20 trading days. | | 11/3/2005 | | Selling VMA surge: On November 3, 2005 we noted a high-magnitude selling volume surge. The (2/20) PVO was 20.8%, indicating that that the average volume was more then 21% higher than it had been for the previous 20 trading days. | | 11/9/2005 | Point A: Buy Puts | Intraday VMA surge: On November 9, 2005 we noted a high-magnitude selling intraday volume surge. The (30-min/1-day) PVO was 59.6%, indicating that that the average modulated volume in period from 12:30 until 13:00 was more then 60% higher than it had been for the previous trading. | | 11/25/2005 | Point B: Sell Puts Buy Calls | Daily Market Outlook (11/23/2005): Mid Term (lasts a few weeks to a few months): We are faced with a situation where the SBV (selling volume / buying volume) and AD (advance / decline) charts diverge. Whereas the 60-day SBV chart shows a significant buildup of selling surges (in early November and again since November 18), a 2-year AD chart does not confirm a break from the current mid-term uptrend. Whereas the SBV chart indicated that a reversal of the mid-term uptrend should have occurred by now, this message is presently being contradicted by the non-confirming advance / decline indicators. Mid-Term Trend Outlook - Once a possible short-term downswing is behind us, we believe the mid-term uptrend will continue. | * High PVO (Percentage Volume Oscillator) values indicate volume surges. As a rule, significant volume surges point to coming market reversals. |
Below we list in detail the actual trades made, along with the netted returns achieved.
Table 2: Details of the trades | Date | Trade | Strike | Expiration | Contracts | Contract Price | Amount | Profit | | 11/09/2005 | Buy QQQMO Puts | $41 | 1/20/2006 | 70 | $1.45 | - $10,150 | | | 11/25/2005 | Sell QQQMO Puts | $41 | 1/20/2006 | 70 | $0.60 | +$4,200 | -58.6% | | 11/25/2005 | Buy QQQAO Calls | $41 | 1/20/2006 | 70 | $1.45 | - $10,150 | |
For this Best trade, A trade (Buy Calls) is opened in order to close it later with profit if the index moves in our favor.
11/25/2005 HGH Associated Traders
List of Trading Newsletters sent out in 2005
| Date |
|
| December 27, 2005 |
"Best Trade" Newsletter (December 27, 2005) |
| November 25, 2005 |
"Best Trade" Newsletter (November 25, 2005) - open trade |
| November 09, 2005 |
"Best Trade" Newsletter (November 9, 2005) - open trade |
| November 02, 2005 |
"Best Trade" Newsletter (November 02, 2005) |
| September 21, 2005 |
"Best Trade" Newsletter (September 21, 2005) |
| September 21, 2005 |
"Best Trade" Newsletter (September 21, 2005) - open trade |
| July 21, 2005 |
"Best Trade" Newsletter (July 21, 2005) |
| June 24, 2005 |
"Best Trade" Newsletter (June 24, 2005) |
| June 17, 2005 |
"Best Trade" Newsletter (June 17, 2005) |
| April 18, 2005 |
"Best Trade" Newsletter (April 18, 2005) |
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