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Best Mid-Term Trade: May
29th, 2002
Our analysis of volume over the past week has
resulted in the following trades using QQQQ Options by our
conservative mid-term trader.
|
Security |
Return |
| Put 1 (QQQQ July) |
+37% |
| Put 2 (QQQQ July) |
+57% |
| Put 3 (QQQQ July) |
+57% |
| Put 4 (QQQQ July) |
Holding |
|
Total Earnings: |
$20,405 |

Even though all the above trades were
very conservative, we still came out on top with a profit of
$20,405
Why didn't you buy any Calls?
Although there were some volume signals that pointed towards a
short-term rally, we found that it was better to keep current put positions
open since there was not yet enough volume to move the market much higher.
Also, MarketVolume's Market Commentary signaled that the market would
continue to decline.
Why buy Cheap July Puts?
Because July 'near-the-money' puts are very cheap, they would bring a
much higher return if the market went down. In general, cheaper puts will
bring a much higher return than more expensive puts. And we purchased July
puts because if the market does not go down further right now, we don't need
to worry about losing very much on the options.
We would like to make it clear to our members
what the motivation was to make the above trades; therefore, we have created
what we call a 'Table of Motivation', in which we try to make it clear the
motivation that was behind each of the above trades.
|
Trade |
Motivation |
MV's Commentary on
Members Home Page during the trade |
|
Buy Put 1, 2, 3 & 4 |
Based on the large amount of volume which appeared as
the NASDAQ 100 index moved up, coupled with MarketVolume's Market Commentary, lead to the decision to open a large position in July QQQQ
puts. 1540 put contracts were opened. |
Since there has not been a lot of supporting
volume as the S&P 500 and NASDAQ 100 indexes declined, we are led to conclude
that this trend [downtrend] will continue until there is sufficient volume to boost the
market. |
| Sell Put 1 |
The market was on a declining rather rapidly and volume
was increasing. The volume which did occur was not high enough to
change the directional trend of the market, but found that it would be
a good idea to close some 1/4 of open put positions simply to be safe. |
Low volume on the downside, and moderate volume
to the upside today suggests that the S&P 500 and NASDAQ 100 indexes will
continue their current downtrend. |
| Sell Put 2 & 3 |
Closed another 2/3 of all open put positions due to a
moderate amount of volume generated as the index declined. Felt that
the best option was to take profits on 2/3 of open positions and leave
1/3 open for future gains. |
Another day of low volume for the S&P 500 and
NASDAQ 100 indexes shows us that there is still little support for the market to
change from it's current down-trend. |
The same principles mentioned above works
for trading S&P 500, S&P 100, Dow Jones, and other indexes.
Here is a detailed list of our investor's
trades, which netted the above returns:
|
Date |
Put/
Call |
Ctrcts |
Contract
Price |
QQQQ
Value |
Strike |
VMA |
Amount |
Profit |
| 5/23/02 |
B P1 |
385 |
$0.35 |
$31.71 |
30 |
1,865,900 |
$13,475 |
|
|
5/23/02 |
B P2 |
385 |
$0.35 |
$31.71 |
30 |
1,865,900 |
$13,475 |
|
| 5/23/02 |
B P3 |
385 |
$0.35 |
$31.71 |
30 |
1,865,900 |
$13,475 |
|
|
5/23/02 |
B P4 |
385 |
$0.35 |
$31.71 |
30 |
1,865,900 |
$13,475 |
|
| 5/28/02 |
S P1 |
385 |
$0.48 |
$30.75 |
30 |
1,142.900 |
$18,480 |
$5,005 |
|
5/29/02 |
S P2 |
385 |
$0.55 |
$30.48 |
30 |
1,434,500 |
$21,175 |
$7,700 |
| 5/29/02 |
S P3 |
385 |
$0.55 |
$30.48 |
30 |
1,434,500 |
$21,175 |
$7,700 |
|
Total: |
+$20,405 |
To see
any of our past best trades, simply select from
the list below.
|
Date |
Indicator |
|
December 30, 2002 |
NASDAQ 100 |
|
December 19,
2002 |
S&P 500 (SPX) |
|
December 10, 2002 |
NASDAQ 100 |
|
November 27, 2002 |
NASDAQ 100 |
|
November 20,
2002 |
NASDAQ 100
(NDX) |
|
November 13, 2002 |
NASDAQ 100 |
|
November 6,
2002 |
S&P 500 (SPX) |
|
November 1, 2002 |
NASDAQ 100 |
|
October 25,
2002 |
S&P 500 (SPX) |
|
September 25, 2002 |
NASDAQ 100 |
|
September 18, 2002 |
S&P 500 |
|
September 6,
2002 |
S&P 500 (SPX) |
|
August 21
2002 |
NASDAQ 100
(NDX) |
|
August 14
2002 |
S&P 500 (SPX) |
|
August 7,
2002 |
S&P 500 (SPX) |
|
July 31, 2002 |
NASDAQ 100
(NDX) |
|
July 24, 2002 |
NASDAQ 100
(NDX) |
|
July 17, 2002 |
NASDAQ 100
(QQQQ) |
|
July 10, 2002 |
S&P 500 (SPX) |
|
June 26, 2002 |
NASDAQ 100
(QQQQ) |
|
June 14, 2002 |
S&P 500 |
|
June 12, 2002 |
NASDAQ 100
(QQQQ) |
|
June 5, 2002 |
S&P 500 (SPX) |
|
May 31, 2002 |
S&P 500 |
|
May 29, 2002 |
NASDAQ 100
(QQQQ) |
|
May 22, 2002 |
NASDAQ 100
(QQQQ) |
|
May 17, 2002 |
S&P 500 |
|
May 15, 2002 |
NASDAQ 100
(QQQQ) |
|
May 8, 2002 |
S&P 500 (SPX) |
|
May 3, 2002 |
NASDAQ 100 |
|
May 1, 2002 |
NASDAQ 100
(QQQQ) |
|
April 28, 2002 |
NASDAQ 100 |
|
April 22, 2002 |
NASDAQ 100 |
|
April 3, 2002 |
S&P 500 |
|
February 25, 2002 |
S&P 500 |
|
February 8, 2002 |
NASDAQ 100 |
|
January 30, 2002 |
NASDAQ 100 |
|
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