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"Best Trade" Newsletters - Options Trading based on S&P 500 and NASDAQ 100.
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QQQQ Options Trade
This "best trade" is a continuation of previous "Best trade" newsletter posted (sent to MV subscribers) on September 9, 2008.
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.
Below you will find a Table of Trade Motivations and a chart showing the trades, including detailed trade calculations.
| Chart 1: | Nasdaq 100 60-day Chart |
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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 |
| September 9, 2008 | Buy Calls | The trade volume over the last couple of session beat the records and it could be compared to volume on January 22-23, 2008 and on July 17-18, 2008 only. The highest volume surges were noted in NYSE, AMEX, S&P 500 and DJU. From the history we see the market reaction on such huge volume and we would expect to see the similarly strong rebound in this case as well. |
| September 11, 2008 | Buy Calls | We will reiterate some of the facts we stated from the last couple of days - we see huge volume surges over the last couple of sessions that beat the records and it could be compared to volume on January 22-23, 2008 and on July 17-18, 2008 only. Based on historical performance, we see that the market reacts by reversing strongly on such huge volume. We expect to see a similarly strong rebound in this case as well. Furthermore we see high odds that today's morning lows marked support and possible beginning of new up-trend. Nasdaq 100 SBV oscillator advanced above minus 20% after being below this level based on the 60-day SBV(20) chart. This reveals that there is a chance of a move up. |
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 |
09/09/2008 | Buy QQQLP Calls | $42 | Dec, 2008 | 50 | $2.87 |
09/11/2008 | Buy QQQLP Calls | $42 | Dec, 2008 | 50 | $2.80 |
In this example, we have based our QQQQ options trade on the Nasdaq 100 volume indicators. Using the principles outlined above, you may wish to trade options on the SPY, ^SPX, DIAMONDS (DIA). It is also conceivable that an analysis similar to the one shown below could be used to trade options based on the NASDAQ 100, Russell 2000, and other indexes.
9/11/2008
HGH Associated Traders
| 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®'s 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. |
About "Best Trade" Newsletters
The “Best Trades” newsletter (also simply referred to as Best Trades) was developed by a group of independent traders who have a close affiliation with MarketVolume™ (a service provider of real-time volume charts). Wishing to share his experiences of trading with volume-based indicators, one of the traders came up with the idea of starting a newsletter.
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The idea took shape and by 2001, we started distributing Best Trades on a regular basis. Today, this newsletter continues to be highly popular and is still available at no charge. If you would like to sign up for this FREE service, please click here.
Please be aware that Best Trades was designed for educational purposes only. It does not provide signals for trading index options, nor does it make any predictions as to where the markets are likely headed.
Because Best Trades has a long history (we began distributing the newsletter in 2001), an extensive archive of trades is available. Click here to browse through our archive of all newsletters.
Looking through the archive, you will notice that Best Trades categorizes two types of trades:
- “Past trades” or “closed” trades: These are trades that were closed a few days before the latest issue of Best Trades was sent out. Some of the closed trades we discuss were made by our affiliate traders, some by MarketVolume™ subscribers, who wanted to share their successes using our volume-based trading techniques;
- “Real-time” or “open” trades: These are
trades that are still active at the time the most current issue of
Best Trades appears. The success of an open trade cannot be
judged until a later date, although we can of course assess its
“performance to date”.
The main reason we started including “open trades” in our newsletter is in response to an argument made by several of our subscribers. They reasoned that by showing and discussing only closed (past) trades, we were in effect basing the value of our trading methodology solely on historical performances. Not wishing to “avoid” the challenge of assessing trades in real-time (which is after all the main justification for our real-time JavaVolume™ charts, see MarketVolume.com), we opted to include some open trades in the newsletter. In this way, we can show Best Trades readers that volume-based technical analysis works just as well in real time.
To assess the performance of a “real-time” trade addressed in a current edition of Best Trades, you may chose to monitor the trade yourself, or you can read about it in a subsequent issue of the newsletter, when the trade will have been closed.
It is imperative that you understand that our newsletter was designed for educational purposes. When we leave a trade open, we strive to show the value of volume-based technical analysis, in real-time, as a trade unfolds. Yet, our open trades must never be seen as recommendations to follow (copy) a particular trade.
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So what about following our real-time trades, you ask? Our answer is that this might be risky business and therefore not a good idea.
There are several reasons:
- Our newsletter will definitively reach you with
some delay (remember, this is a free service and we have xx thousand
subscribers), so it might prove to be too late to open a position
similar to ours. We follow a clear, step-by-step procedure for
sending out trading information: First, data goes to our paying
MarketVolume™ members, then to our MarketVolume™ Free Trial members,
only after that to all other (free) subscribers;
- Another reason we advise against placing trades based on our newsletter is technical in nature. Because all of our trades are based on an analysis of the relationships between volume and price/index movements (which all change in rapid succession), you must absolutely have access to real-time volume charts (e.g., our JavaVolume™ charts) for the S&P 500 and NASDAQ-100 indexes, at a very minimum.
Below you will find a history of the real-time (open) trades that we published in our "Best Trades" newsletter. Click here to browse through our archive of all newsletters.
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Additional notes:
Our aims are:
- To show you how to apply our volume indicators to particular market situations;
- To explain the specific correlations that exist between volume spikes and index movements.
We do not mean to imply that you should follow our trades; rather, we suggest that you may make use of our volume analytics in order to develop your own trading style. We also urge you to paper trade before committing your money to the markets.
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