Technical Analysis. |
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Highlight Investments Group |
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June 26th, 2002
Our analysis of volume over the past week has resulted in the following trades using QQQQ Options by our conservative short-term trader.
| Security | Return |
| Put 1 (QQQQ Aug) | +11% |
| Put 2 (QQQQ Aug) | +41% |
| Put 2 (QQQQ Aug) | +22% |
| Put 2 (QQQQ Aug) | 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 $14,900
Why buy August Puts?
Even though August 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.
Why trade only Put Options?
We have been only buying puts simply because the current market trend is
down. The safest way to profit from the market is to always make trades based on
the current market trend.
Why do you only have positive trades
since May 20th?
The main reason we have had only positive trades is simply because we
have been only been making trades consistent with the market trend, which
is currently up. All if our members have access to daily updated market
commentaries that explain in full detail the current market trend and what
type of short-term fluctuations to expect.
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 |
Bought a large amount of puts due to a substantial amount of volume which appeared to the upside on the NASDAQ 100 index. When a large amount of volume occurs to the upside in this type of market, we can almost expect with 100% certainty that the market will go down due to the volume spike. | Overall, since there has not yet been much supportive volume to the downside we still believe the market will continue it's current downtrend. This downtrend will continue until we see a substantial amount of volume to the downside, and then the indexes may change direction. |
| Sell Put 1 | Sold a partial amount of the open position due to a moderate amount of volume to the downside of the NASDAQ 100 index. There was a chance that the index was going to go up after this volume, and had plans to purchase more puts after the index moved higher. | Today we saw the rally that we have mentioned would eventually happen due to concurrent volume to the downside, but this rally was associated with a lot of volume to the upside leading us to believe the downtrend will continue. |
| Sell Put 2 | Since the NASDAQ 100 index did not move higher as expected, but moved substantially lower, decided to close more open put positions as there is yet again a moderate amount of volume which could move the index higher. | Today was the first time in a long time that we have seen any substantial supportive volume to the downside for the S&P 500 and NASDAQ 100 indexes. This volume could move the indexes higher in the short-term, but it is not yet enough volume to create a reversal in the market and therefore, we believe that the current downtrend will continue until we see more supportive volume. |
| Sell Put 3 | Decided to close more open put option positions as the index looks as though market could move higher due to concurrent volume spikes to the downside of the index. |
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 |
| 6/24/02 | B P1 | 100 | $1.90 | 26.49 | 26 | 2,964,300 | $19,000 | |
| 6/24/02 | B P2 | 125 | $1.90 | 26.49 | 26 | 2,964,300 | $23,750 | |
| 6/24/02 | B P3 | 75 | $1.90 | 26.49 | 26 | 2,964,300 | $14,250 | |
| 6/24/02 | B P4 | 50 | $1.90 | 26.49 | 26 | 2,964,300 | $9,500 | |
| 6/25/02 | B P1 | 100 | $2.10 | 25.77 | 26 | 2,216,000 | $21,000 | $2,000 |
| 6/26/02 | S P2 | 125 | $2.68 | 24.51 | 26 | 2,239,600 | $33,500 | $9,750 |
| 6/26/02 | S P3 | 75 | $2.32 | 25.28 | 26 | 2,092,700 | $17,400 | $3,150 |
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Total: |
+$14,900 | |||||||
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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