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|
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Best Short-Term Trade:
September 6, 2002
This week our professional trader was able to
capitalize on our volume signals for the S&P 500
index.
|
Security |
Return |
| Call 1 (SPX Nov) |
Holding |
| Call 2 (SPX Nov) |
Holding |
| Call 3 (SPX Nov) |
+17.52% |
| Call 4 (SPX Nov) |
+17.52% |
|
Total Profit: |
+$8,320 |

Even though all the above trades were
not entirely without risk, we came out on top with a
profit of
$8,320
Why SPX options?
Generally we trade options, and in this case SPX (S&P 500) options because
they offer a high return, but are less risky than futures for the S&P 500 index.
One can trade S&P 500 index futures, SPDRs stocks, SPX options (as we did), or
even SPX futures options. There is a wide array of trading vehicles that are
tied to the S&P 500 index, and it's mostly up to the individual trader as to
which is preferred to trade.
Why buy expensive November Calls?
Even though November 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 |
Bought calls based on MarketVolume's
Market Commentary which stated the market should soon resume an
uptrend, and after a substantial decline with supportive volume, it
was a good entry point. |
Today the S&P 500 and NASDAQ 100 continued
their decline, and in doing so, generate more supportive volume to the downside
which is beginning to cumulate. This cumulative volume will cause the market to
move up shortly and continue it's uptrend. |
| Buy
Call 2 |
Baed on the Market Commentary and the
fact that there was a large amount of supportive volume after the
indexes had a large correction was an excellent sign of a mid-term
support level which indicates the uptrend should continue shortly
after this point. |
Today the S&P 500 and NASDAQ 100 indexes declined
substantially, but during this decline they generate a large amount of
supportive volume to the downside which is a good sign that the uptrend will
soon continue.
|
| Buy
Call 3 |
| Buy
Call 4 |
| Sell
Call 3 |
Sold 50% of all option positions in
order to take some profit, and take advantage of a chance that the
market might move lower before going up again. If the market does move
lower it is an excellent point to buy more call contracts to lover the
average price of purchase. |
Once again today we had supportive and
resistive volume which roughly cancelled each other out. Due to this, the market
could continue on a somewhat sideways trend until we see more supportive volume,
but we still believe the market will continue its uptrend. |
| Sell
Call 4 |
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 |
| 8/29/02 |
B C1 |
5 |
$52.90 |
904.33 |
910 |
2,272,700 |
$26,450 |
|
|
9/3/02 |
B C2 |
5 |
$51.76 |
887.84 |
890 |
2,663,600 |
$25,880 |
|
| 9/3/02 |
B C3 |
5 |
$47.50 |
879.76 |
890 |
3,265,900 |
$23,750 |
|
|
9/3/02 |
B C4 |
5 |
$47.50 |
879.76 |
890 |
3,265,900 |
$23,750 |
|
| 9/6/02 |
S C3 |
5 |
$55.82 |
899.00 |
890 |
2,361,000 |
$27,910 |
$4,160 |
|
9/6/02 |
S C4 |
5 |
$55.82 |
899.00 |
890 |
2,361,000 |
$27,910 |
$4,160 |
|
Total: |
+$8,320 |
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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