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Best Short-Term Trade
May 12th, 2004
This "Trade of the week" was based
on our volume indicators.
NOTE: We discuss our “best trades of the week” here mainly for
educational purposes. The trading examples we illustrate are based
principally on our volume indicators and market commentaries. Our main
intent is to show you how you can apply our volume indicators and to explain the
specific correlations that exist between volume spikes and the movement of the
indexes. We do not mean to imply that you should follow our exact trades, but
rather wish to suggest that you may make use of our volume analytics to develop
your own trading style. We also urge you to paper trade before committing your
money to the markets.
For this week’s “trade of the
week”, "Buy QQQQ Call #1 and #2" is opened
in order to close it later with profit if the
index moves in our favor.
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Nasdaq 100 Indicator
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Notes:
When do you normally close a particular “Best Trade of the Week”?
Under normal circumstances, we exit from a trade when we see a clear,
unambiguous volume signal. The actual signal we look for must not necessarily
be as pronounced as the one that got us into the trade. In order to play it
safe, we sometimes even terminate a trade in the absence of a volume signal -
for instance when we are up by 20 - 30%, or in the presence of certain market
affecting factors , such as news on geopolitical events, Fed announcements,
and others. In other words, there are certain situations where we may ignore
our volume indicators. It is our belief that in options trading, it is often
better to take a quick profit rather than overstaying and putting the entire
investment at risk.
In the following, we would like to show you the
motivating factors that led us to take above trades. For this purpose, we have
created what we call a 'Table of Trade Motivators':
|
Trade |
Volume Motivation |
Buy Call #1
05/12/2004
Left opened |
After initially
opening lower, the market began to quickly move lower, generating increasing
amounts of supportive volume to the downside in the process. By 11:15, the
market encountered a large supportive VMA spike to the downside, but the
result of this initial supportive volume spike was to only slow the market's
decline. As such, the market continued to move lower until approximately
12:15 where the market generated even more supportive volume to the
downside. |
Buy Call #2
05/12/2004
Left opened |
The market
continued its decline until it ran into another very large supportive VMA
spike to the downside at 14:00. |
These are the trades which netted the returns
shown above:
Date |
Trade |
Strike |
Expiration |
Contracts |
Contract
Price |
Amount |
Profit |
| 05/12/2004 |
Buy Call #1 |
$35 |
July |
50 |
$1.35 |
-$6750 |
|
| 05/12/2004 |
Buy Call #2 |
$35 |
July |
50 |
$1.35 |
-$6750 |
|
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Total: |
+$0 |
For this week’s “trade of the week”,
"Buy QQQQ Call #1 and #2" is opened
in order to close it later with profit if the index moves in our favor.
To see
any of our past best trades, simply select from
the list below.
|
Date |
Indicator |
|
September 25, 2004 |
QQQQ Options |
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September 18, 2004 |
QQQQ Options |
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September 10, 2004 |
QQQQ Options |
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September 9, 2004 |
QQQQ Options |
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September 7, 2004 |
QQQQ Options |
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September 2, 2004 |
QQQQ Options |
|
August 31, 2004 |
QQQQ Options |
|
August 19, 2004 |
QQQQ Options |
|
August 18, 2004 |
QQQQ Options |
|
August 15, 2004 |
QQQQ Options |
|
August 5, 2004 |
QQQQ Options |
|
August 3, 2004 |
QQQQ Options |
|
July 31 2004 |
QQQQ Options |
|
July 21, 2004 |
QQQQ Options |
|
July 14, 2004 |
QQQQ Options |
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July 13, 2004 |
QQQQ Options |
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July 1, 2004 |
QQQQ Options |
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June 23, 2004 |
QQQQ Options |
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June 20, 2004 |
QQQQ Options |
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June 6, 2004 |
QQQQ Options |
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May 30, 2004 |
QQQQ Options |
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May 25, 2004 |
QQQQ Options |
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May 20, 2004 |
QQQQ Options |
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May 16, 2004 |
QQQQ Options |
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May 12, 2004 |
QQQQ Options |
|
May 09, 2004 |
QQQQ Options |
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April 29,
2004 |
QQQQ Options |
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April 22,
2004 |
QQQQ Options |
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April 18,
2004 |
QQQQ Options |
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April 10,
2004 |
QQQQ Options |
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April 6, 2004 |
S&P 500
Options |
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March 28,
2004 |
QQQQ Options |
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March 14,
2004 |
QQQQ Options |
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March 7, 2004 |
QQQQ Options |
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February 29,
2004 |
QQQQ Options |
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February 22,
2004 |
QQQQ Options |
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February 15,
2004 |
QQQQ Options |
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February 8,
2004 |
QQQQ Options |
|
February 1,
2004 |
QQQQ Options |
|
January 25,
2004 |
QQQQ Options |
|
January 18,
2004 |
QQQQ Options |
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January 12,
2004 |
QQQQ Options |
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