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S&P 500 June 14, 2002
One of our short-term options traders traders has made some very profitable trades over the past month. Based on our advice and analysis he was able to make over $23,050 in the last month!
| Security | Return |
| SPX Put (July) | 40% |
| SPX Put (July) | 40% |
| SPX Put (July) | Holding |
|
Total Earnings: |
$23,050 |
Over the past week we have seen many volume spikes, but most of those spikes occurred to the upside (as the index was moving up). Since the majority of these spikes were to the upside we need to consider that the market will have to move lower in reaction to this volume. The market has not yet moved low enough to account for the amount of volume we have been seeing to the upside this week; therefore, we are considering that this volume must have a cumulative effect and that at some point in the near future the market will move lower in response. That is, unless of course, there is a large amount of volume to the downside which would be supportive of a new move up. But we have yet to see supportive volume at those levels.
Our professional short-term options trader has come out of this week with some handsome profits, although he has left one position open over the weekend in anticipation that the market may move even lower on Monday. There is a good chance that the market will move lower unless there is more supportive volume to the downside. Our professional trader made most of his trades this past week based on his own analysis of volume, but he did pay heed to our Market Commentary, which mainly served to solidify and reinforce the conclusions he had already come to. In any event, he was able to make great use of MarketVolume's volume charts and analysis.
The same principles mentioned above works for trading NASDAQ 100, S&P 100, Dow Jones, and other indexes.
We would like to make it clear to our members what the motivation for our professional trader was to make the above trades; therefore, we have created what we call a 'Table of Motivations', 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 Call 1 | Based on the large amount of volume to the upside in the afternoon found that it would be a good point to purchase S&P 500 put options (SPX). MarketVolume's Market Commentary the market was still in a downtrend, and a cursory volume analysis showed that there was not enough support to move the market up. | 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. |
| Buy Call 2 | ||
| Buy Call 3 | The market has not yet reacted to the volume which occurred the previous afternoon, and therefore decided to buy more put options as the market WILL move lower eventually. MarketVolume's Market Commentary did mention that the volume to the upside only serves to confirm that the market is still very much in a downtrend. | It looks like today a lot of short players closed their positions, as near the end of the day there was a large volume spike for the S&P 500 and NASDAQ 100 indexes. Yesterday afternoon, and today in the morning, there was a large amount of volume to the downside which moved the market up today, but volume to the upside at the end of today signals that the market is still in a downtrend. |
| Sell Call 1 & 2 | Since the market dropped quite quickly, and there was some volume to the downside, but not much, found that a safe option was to close 2/3 of open positions and keep 1/3 open for the futurs, as the market will probably still move lower, but if it does not, this option is less risky. Especially considering the fact that it's a weekend, it was a conservative move to close 2/3 of all option positions. | Once again, the S&P 500 and NASDAQ 100 indexes have moved lower due to more volume to the upside. There was a moderate amount of volume to the upside of the S&P 500 and NASDAQ 100 indexes, but this volume is cumulative. When you take into consideration all the volume to the upside over the past few days, it becomes a tremendous amount. Why hasn't the market acted on this volume to the upside? There is no specific answer to that, other than that the market WILL act on this volume and it HAS to in the near future; therefore, we still believe that the market is in a downtrend phase. |
Based on MarketVolume's analysis, our professional investor was able to make the following returns:
| Security | Return |
| SPX Put (July) | 40% |
| SPX Put (July) | 40% |
| SPX Put (July) | Holding |
|
Total Earnings: |
$23,050 |
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 (120 Min) |
Amount | Profit |
| 6/12/02 | B P1 | 12 | $22.88 | 1,015.35 | 1,005 | 4,324,600 | $27,456 | |
| 6/12/02 | B P2 | 13 | $22.88 | 1,015.35 | 1,005 | 4,324,600 | $29,744 | |
| 6/13/02 | B P3 | 15 | $19.87 | 1,022.10 | 1,010 | 3,018,600 | $27,805 | |
| 6/14/02 | S P1 | 12 | $32.10 | 993.25 | 1,005 | 3,574,400 | $38,520 | $11,064 |
| 6/14/02 | S P2 | 13 | $32.10 | 993.25 | 1,005 | 3,574,400 | $41,730 | $11,986 |
|
Total: |
+$23,050 | |||||||
To see any of our past best trades, simply select from the list below.
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