Technical Analysis. Nasdaq 100, |
||||||
|
Highlight Investments Group |
|||||
|
||||||
|
||||||
 |
|
|
||||||||||||||||
|
|
|||||||||||||||||
June 5th, 2002
Our analysis of volume over the past week has resulted in the following trades using SPX Options by our conservative mid-term trader.
| Security | Return |
| Put 1 (SPX July) | +50% |
| Put 2 (SPX July) | +116% |
| Put 3 (SPX July) | Holding |
|
Total Earnings: |
$18,350 |
Even though all the above trades were very conservative, we still came out on top with a profit of $18,350
Why Buy Puts?
Based on MarketVolume's Market Commentary, and the fact that the market in
mid may was showing definite signs of hitting a resistance level, we found
that the best option would be to play down.
Why buy July Puts?
Even though September Put 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 option. By trading options that are at least
one month ahead, we protect ourselves from unforeseen short-term
fluctuations in the market.
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 | Based on a large amount of volume which was occurring to the upside of the index, and the fact that MarketVolume's Market Commentary was beginning to talk of the market moving lover, led to the conclusion that it would be an excellent time to play down by buying S&P 500 put options. | Today we saw a great deal of volume near the end of the trading day for the NASDAQ 100 and S&P 500 indexes. A cursory analysis of this volume makes us think that the market may begin to decline. |
| Buy Put 2 | MarketVolume's Market Commentary was still saying the market will move lower, and that coupled with the fact that a great deal of volume near the end of the day led to the conclusion that the market will move lower and it would be a good point to add to the puts already purchased. | Recent volume, and lack there of, have led us to conclude that the market's chance of re-testing of it's support level are increasing. |
| Buy Put 3 | Once again there was a good deal of volume as the indexes were in a short-term rally. This coupled with MarketVolume's Market Commentary which stated that there was still no supporting volume, led to the conclusion that the market will still move lower from here and now would be an excellent time to buy even more puts. | Since this volume was mostly to the up-side, and the lack of any supporting volume as the index moved down, have increased the chances of another test of the support level for the NASDAQ 100 and S&P 500 indexes. |
| Sell Put 1 | There was a moderate amount of volume to the downside as the indexes moved lower, and MarketVolume's Market Commentary mentioned that the market could go up on the very short-term. Use this point as a good point to take profit on the first put option. | Once again today the market continued it's downtrend. In the morning there was some volume to the downside, which moved the market higher for a short while. The volume which appeared during the rest of the day was mostly to the upside again, which could be due to impatient short players taking their profits early, this is a could be a signal that the market could continue it's downtrend. |
| Sell Put 2 | Once again the market moved much lower, but there was a moderate amount of volume to the downside. This coupled with MarketVolume's Market Commentary which suggested that the market could move slightly up in the short-term, led to the conclusion that now would be another good point to take profit from some of the open put options. Decided to leave 15 contracts open, as MarketVolume still believes that the market will in fact move lower from this point. | Our outlook on the market is still that it's in a downtrend, and the fact that the S&P 500 has tested and gone though it's support level without enough volume to change the direction of the index, leads us to believe that the S&P 500 and NASDAQ 100 will continue their decline. There was a moderate amount of volume today on the downside of the S&P 500 and NASDAQ 100 indexes, and this volume may cause the indexes to make a short-term move up. |
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 |
Index Value |
Strike | VMA | Amount | Profit |
| 5/16/02 | B P1 | 10 | $10.85 | 1,092.50 | 1,030 | 4,046,200 | $10,850 | |
| 5/22/02 | B P2 | 10 | $11.15 | 1,085.90 | 1,030 | 2,831,200 | $11,150 | |
| 5/23/02 | B P3 | 15 | $8.80 | 1,096.35 | 1,030 | 2,972,400 | $13,200 | |
| 5/30/02 | S P1 | 10 | $16.25 | 1,059.75 | 1,030 | 2,724,700 | $16,250 | +$5,400 |
| 6/4/02 | S P2 | 10 | $24.1 | 1,035.30 | 1,030 | 3,003,600 | $24,100 | +$12,950 |
|
Total: |
+$18,350 | |||||||
To see any of our past best trades, simply select from the list below.
|
|
QQQQ Trading System QQQQ, SPY and DIA trading signals for conservative mid- and long-7 term traders ...
|
NASDAQ Polling Service Visit Sites:
Options Trading
Stock Market Sentiment
Financial Glossary
Stock Market
| RISK STATEMENT: The trading of stocks, futures, commodities, index futures or any other securities has potential rewards, and it also has potential risks involved. Trading may not be suitable for all users of this Website. Analyst research available through this Website does not constitute a recommendation or a solicitation any particular investor should purchase or sell any particular securities. Past performance is not necessarily an indication of future performance. You absolutely must make your own decisions before acting on any information obtained from this Website. |
|
Products ||| Advertise with us
||| Site Map
Disclaimer |
Privacy
|