Technical Analysis. Nasdaq 100, |
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Highlight Investments Group |
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June 12th, 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) | +76% |
| Put 2 (QQQQ July) | Holding |
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Total Earnings: |
$13,230 |
Even though all the above trades were very conservative, we still came out on top with a profit of $13,230
Why trade Options?
Options offer the potential of a high short-term return. Compared to
futures, options are less risky, and don't require as much capital to trade.
Those who trade options should reduce the risk by only trading options that
are at least two or three months away from expiration, or as liquidity
permits.
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 occurred to the NASDAQ 100's upside, and the fact that MarketVolume's Market Commentary notes that the market is still in a downtrend until there is substantial volume to the downside, led to purchasing this put option for the QQQQ. | Yesterday's volume to the upside on the S&P 500 and NASDAQ 100 indexes helped move the market lower today, and today there was still more volume to the upside. This behavior of the market leads us to believe that the current downtrend of the S&P 500 and NASDAQ 100 indexes is going to continue. |
| Buy Put 2 | There was a good deal of volume to the downside in the morning, which signaled that the market could move up in the short-term. Considering that MarketVolume's Market Commentary still says the market is in a downtrend couldn't be considered as this Market Commentary was for the previous day. Therefore, found that it would be a safe bet to close all open put options. | Volume to the upside over the past few days eventually caused the S&P 500 and NASDAQ 100 to move lower today, but as they began to move lower, volume was beginning to increase to the downside. This supportive volume is not enough to cause the market to change from it's current downtrend, but it may be enough to cause the S&P 500 and NASDAQ 100 indexes to move up in the short-term future. MarketVolume still analyses the market situation as a continuing downtrend, until there is enough supportive volume to denote otherwise. |
| Sell Put 1 | Huge volume as the index moved higher later in the day signaled that the market will probably move lower in the short-term future, and therefore decided to open a new put for QQQQ and keep it open until the Market Commentary changes or there is substantial volume to the downside. |
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 |
| 6/7/02 | B P1 | 315 | $0.55 | 28.26 | 26 | 2,207,400 | $17,325 | |
| 6/12/02 | S P1 | 315 | $0.97 | 27.37 | 26 | 1,771,400 | $30,555 | $13,230 |
| 6/12/02 | B P2 | 225 | $0.36 | 27.63 | 25 | 2,650,000 | $8,100 | Holding |
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Total: |
+$13,230 | |||||||
To see any of our past best trades, simply select from the list below.
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QQQQ Trading System QQQQ, SPY and DIA trading signals for conservative mid- and long-7 term traders ...
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