Technical Analysis. |
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January 22, 2003
This week we made some good mid-term NASDAQ 100 index share trades (options trading would be similar) where our professional trader was able to purchase calls based on strong signals and what we published in our Market Commentary.
NOTE: This chart of the week is meant mainly for educational purposes only. We don't recommend that our customers follow these exact trades. We suggest that you develop your own trading style and try doing some paper trading before using our volume analytics.
| Security | Return |
| Put 1 (NDX March) | +19.2% |
| Put 2 (NDX March) | +49.5% |
| Put 3 (NDX March) | Holding |
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Total Profit: |
+$8,560 |
Even though all the above trades were not entirely without risk, we came out on top with a profit of $8,560
Should I Trade Options?
Only very experienced traders should trade options because of the high risk.
You can always trade index shares instead of options and still make profits;
returns will not be as large.
I trade the S&P 500 / SPDRs. How does this apply to me?
The S&P 500 and NASDAQ 100 indexes have generally the same behavior. If you
overlaid a chart of each of them during a short period such as this one, their
general dynamic would be the same. Because of this, you can trade S&P 500 index
shares, and options.
Should I try to paper trade before trading options?
Yes! We suggest that anyone who is new to our signals and analysis try doing
some paper trading to start, at least until they are comfortable with
interpreting our signals.
Why buy puts that are so far 'out of the money'?
The reason we decided to go with April SPX puts with a strike of 725 is simply
because those happened to be the most liquid (easy to buy and sell quickly at a
reasonable price) put options available for March.
We would like to make it clear to our members what the motivations were that lead to 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 | Because of the cumulating amounts of resistive volume, MarketVolume's Market Commentary, and the fact that there was another large resistive volume spike today, decided that it would be an excellent point to buy some NASDAQ 100 put options. | Today we saw another very large resistive VMA spike to the upside as the indexes moved another jump higher. It is this resistive volume, together with the cumulative resistive volume, that we believe will move the market lower in the mid-term. |
| Buy Put 2 | Since the index went even higher, generating more cumulative resistive volume to the upside, and MarketVolume's Market Commentary stated that the market is still in a downtrend, found that it would be a good point to increase the put position and average down the price of the position. | Because of the supportive volume we saw today the market may move higher in the short-term, but our mid and long-term outlooks remain unchanged. The market is still in a general downtrend. Because of the cumulative effects of resistive volume over the past week we believe that the market will eventually continue its downtrend. |
| Buy Put 3 | ||
| Sell Put 1 | Sold two thirds of all open put positions because of the supportive volume seen today. MarketVolume's Market Commentary did mention that with some supportive volume the market could move higher in the short-term, but still continue on a downtrend. This influenced the decision to sell two thirds of open positions, but keeping one third open for the future. If the market does move higher it will be a good point to buy more puts. | Yesterday's supportive VMA spikes caused the market to move higher in the morning, but as it moved higher there was a moderate amount of resistive volume that caused the market to move lower throughout the rest of the day. In the afternoon, as the market was moving lower, there was a moderately high VMA spike to the upside that may cause the market to move higher in the short-term. |
| Sell Put 2 |
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 |
| 1/7/03 | B P1 | 20 | $7.30 | 1,071.79 | 800 | 1,480,700 | $14,600 | |
| 1/10/03 | B P2 | 20 | $5.82 | 1,087.06 | 800 | 1,520,500 | $11,640 | |
| 1/10/03 | B P3 | 20 | $5.82 | 1,087.06 | 808 | 1,520,500 | $11,640 | |
| 1/17/03 | S P1 | 20 | $8.70 | 1,022.50 | 800 | 1,178,000 | $17,400 | $2,800 |
| 1/17/03 | S P2 | 20 | $8.70 | 1,022.50 | 800 | 1,178,000 | $17,400 | $5,760 |
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Total: |
+$8,560 | |||||||
To see any of our past best trades, simply select from the list below.
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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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