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Best Short-Term Trade: August
14th, 2002
This week our professional trader was able to
capitalize on our volume signals for the S&P 500
index which signaled that the market would move higher.
|
Security |
Return |
| Call 1 (SPX Sept) |
+41.9% |
| Call 2 (SPX Sept) |
+58.8% |
|
Total Profit: |
+$18,610 |

Even though all the above trades were
somewhat risky, we came out on top with a
profit of
$18,610!
Why didn't you buy any Puts?
Although there were some volume signals that pointed towards short-term
downtrends, we found that it was better to keep current call positions open
since there was not yet enough volume to move the market much lower at those
points. Also, MarketVolume's Market Commentary signaled that the market
would continue to decline.
Why buy expensive September Calls?
Even though September Call options are more
expensive, they tend of 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. Also, if the uptrend
continues on a long-term, one can hold these options for a longer period as
they increase substantially in value.
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 Call 1 |
Based on the fact that the NASDAQ 100 has almost
reached it's support level, and that there was a good deal of
supportive volume to the downside, decided to take a chance that the
NASDAQ 100 will bounce off this level and the S&P 500 will follow the
trend. |
Today the S&P 500 and NASDAQ 100 indexes
continued their decline, and the NASDAQ 100 has almost reached it's support
level. There is a chance that the NASDAQ 100 will bounce off this level and the
rest of the market will follow. By doing this the market could confirm an
uptrend. |
| Sell Call 1 |
Since there was a good deal of volume to the upside as
the S&P 500 index began to go up there was a good chance the market
would go down from this point, so decided to play safe and close all
open call positions. |
Today we saw some supportive volume on the NASDAQ
100 and S&P 500 indexes in the mid afternoon, and this supportive volume to the
downside helped move the indexes higher and into positive territory today. |
| Buy Call 2 |
Due to the fact that the S&P 500 index declined
substantially along with a great deal of volume to the downside, the
chances were high that the S&P 500 would rebound shortly and
dramatically. |
Today the S&P 500 and NASDAQ 100 indexes
moved quite a lot lower due to the cumulative effects of volume to the upside
over the past several days. Today there was quite a lot of supportive volume to
the downside signaling that there is a chance for the indexes to move higher
soon and perhaps continue their uptrend. |
| Sell Call 2 |
The S&P 500 index did rebound, and did go up
dramatically, but there was a HUGE amount of volume to the upside,
leading to the decision that all open call positions should be closed
since there is a high chance that the market will move lower in the
short-term from this point. |
The same principles mentioned above works
for trading NASDAQ 100, 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 |
| 8/5/02 |
B C1 |
10 |
$20.75 |
839.52 |
870 |
3,063,600 |
$20,750 |
|
|
8/7/02 |
S C1 |
10 |
$29.45 |
864.29 |
870 |
3,362,400 |
$29,450 |
$8,700 |
| 8/14/02 |
B C2 |
10 |
$16.85 |
883.67 |
920 |
4,134,200 |
$16,850 |
|
|
8/14/02 |
S C2 |
10 |
$26.76 |
912.03 |
920 |
4,381,800 |
$26,760 |
$9,910 |
|
Total: |
+$18,610 |
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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