Best Trade Newsletters
"Best
Trade" Newsletter (April 27, 2006)
21.4% returns in 1 day
by trading Volume Surges
and Advance/Decline Indicators!
This "best trade" is a continuation of previous "Best trade" newsletter
posted (sent to MV subscribers) yesterday on
April 26, 2006 where we left a QQQQ Call position open.
|
Security |
Return |
| Calls
(QQQQ - QQQGP) |
$2,400 |
Below you will find a Table of Trade Motivations and a chart showing the trades,
including detailed trade calculations.
|
Chart 1: |
NASDAQ 100 Volume
Surges - April, 2006. |
 |
Chart 2: |
NASDAQ 100 Advance/Decline Volume Ratio - April, 2006. |
 |
In Table 1 - a 'Table of Trade Motivators'
- we show the motivating factors that led us to take the above trades.
Table 1: Table of Trade Motivators
|
Date |
Trading
Decision |
Motivation |
|
04/21/2006 |
|
On April 21, 2006 we noted a high-magnitude buying volume
surge to the index downside. The (1/10) PVO was 26.2%, which
indicates that the volume seen on this day exceeded the average volume
over the previous 10 trading days by 26.7%. The bulk of this volume surge
occurred between 13:50 and 16:00 during a time when the index was in
decline (see 5-day index volume charts using a 15-minute VMA).
On the same day we noted low market sentiment readings. The
NASDAQ 100 advance/decline (A/D) issues and A/D volume ratios reached strongly
bearish levels of 0.15 and 0.19 around 15:10, respectively. |
| 04/24/2006 |
|
On April 24, 2006 the
NASDAQ 100 advance/decline (A/D) issues and A/D volume ratios reached strongly
bearish levels of 0.19 and 0.12 around 9:55, respectively. This revealed an
extremely bearish market sentiment, indicating the market was oversold and thus
prone to trend reversals. |
| 04/25/2006 |
|
On April 25, 2006 we noted a high-magnitude buying volume
surge to the index downside. The (1/10) PVO was 16.7%, which
indicates that the volume seen on this day exceeded the average volume
over the previous 10 trading days by 16.7%. |
| 04/26/2006 |
Buy Calls |
On April 26, 2006 we decided to buy July expiration
calls. |
| 04/27/2006 |
Sell Calls |
On April 27, 2006 we noted a high-magnitude
selling volume
surge to the index upside. The (1/10) PVO was 25.8%, which
indicates that the volume seen on this day exceeded the average volume
over the previous 10 trading days by 25.8%.
Since the options we bought yesterday were in
profit we decided that it would be prudent to
fix profits today. |
Below we list in detail the actual trades made,
along with the netted returns achieved.
Table 2: Details of the trades
|
Date |
Trade |
Strike |
Expiration |
Contracts |
Contract
Price |
Amount |
|
04/26/2006 |
Buy QQQGP Calls |
$42 |
7/21/2006 |
80 |
$1.40 |
-$11,200 |
|
04/27/2006 |
Sell
QQQGP Calls |
$42 |
7/21/2006 |
80 |
$1.70 |
+$13,600 |
|
Profit: |
+$2,400
(21.4%) |
Fast Answers:
If you are closing a trade, does this mean
that you expect a trend reversal?
Not necessarily. Our trade may be closed due to
various circumstances. We may close a trade even when all indicators favor the
current trend continuation. Due to the "Time Factor", options trading is very
risky (it’s very risky to stay in any particular position for a long period of
time) and we strongly believe that in options trading it’s better to have short
lived trades, especially when the market moves sideway most of the time.
What factors are considered when you open an
option trade and when you close an option trade?
To open a trade we consider the following
factors, sequenced in order of priority:
- What do our volume and advance/decline technical indicators tell us?
- What is the current mid-term market trend?
To close a trade we consider the following
factors, sequenced in order of priority:
- When our options expire?
- How long have we been in the position?
- Are we comfortable with current profits/losses?
- What do technical indicators show at the current moment?
©HGH Associated Traders
Important:
The analysis results presented in the "Best Trade" may differ from
the outlook presented in the daily Market Commentaries. Results may also differ
from the trading signals generated for Exchange Traded Funds (ETFs), or from any
other research and analysis efforts shared with our members. These are products
developed by independent research teams, delivered to MarketVolume® members.
While sharing some research results, these autonomous research teams may use
different systems and may have dissimilar market outlooks.
| Disclaimer: This newsletter is intended
for educational purposes only – it does not constitute trading advice,
nor does it make or imply any market trend predictions. This newsletter illustrates
examples based
principally on MarketVolume® index volume indicators and advance/decline (AD)
indicators. 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
analytics to develop your own trading style. |
|
2006 (first part) |
|
Date |
Indicator |
|
June 28, 2006 |
QQQQ Options |
|
June 15, 2006 |
QQQQ Options Trading |
|
June 15, 2006 |
Options Trading |
|
May 17, 2006 |
Trading QQQQ Options |
|
May 12, 2006 |
Trading Options |
|
May 11, 2006 |
QQQQ |
|
May 8, 2006 |
QQQQ Trading |
|
April 27, 2006 |
Trading QQQQ |
|
April 26 2006 |
QQQQ Options |
|
April 18, 2006 |
Trading QQQQ Options |
|
April 17 2006 |
QQQQ Trading |
|
March 29, 2006 |
QQQQ Options |
|
March 28 2006 |
Options Trading |
|
March 14, 2006 |
QQQQ |
|
March 10 2006 |
QQQQ Options Trading |
|
March 8, 2006 |
Trading QQQQ Options |
|
March 3, 2006 |
QQQQ Options |
|
February 28, 2006 |
QQQQ Trading |
|
February 8, 2006 |
Options Trading |
|
February 2, 2006 |
QQQQ Options |
|
January 31, 2006 |
QQQQ |
|
January 29, 2006 |
QQQQ Options |
|
January 20, 2006 |
QQQQ Options Trading |
|
January 13, 2006 |
QQQQ Options |
|
|