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This "best trade" is a continuation of previous "Best trade" newsletter posted (sent to MV subscribers) onJuly 14, 2006 where we left a QQQQ Call position open.

In the following example, we have based our  QQQQ options trades on NASDAQ 100 advance / decline indicators. Using the principles outlined below, you may wish to trade options on the SPDRs (SPY), ^SPX, DIAMONDS Trust, Series 1 (DIA), as well as on other underlies that generally tend to move in concert with the S&P 500 index. 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.

For this “Best trade”, "Buy Puts" trade  is opened
in order to close them later with profit if the index moves in our favor.

We expect top close "Buy Puts" trade once the SBV Oscillator drops below minus 33% and then advances back to about that level (based on NASDAQ 100 15-day SBV Oscillator chart with 240-min VMA). We will most likely buy calls at the same moment.

Below you will find a Table of Trade Motivations and a chart showing the trades, including detailed trade calculations.

Chart 2:	NASDAQ 100 SBV Oscillator - July, 2006. 15-day View, 240-min VMA.

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
07/13/06	Buy Calls	High-magnitude buying surges were noted in all market sectors. The NASDAQ 100 (1/10) PVO was 25.5%, indicating that the volume seen on this day exceeded the average volume over the previous 10 trading days by 34.2%. The (1/10) PVO for S&P 500 was 25%, for the Dow Jones Industrial it was - 20%. The SBV Oscillator dropped below minus 33% and rallied to about that level back on July 13, 2006 around 11:00 EST (see NASDAQ 100 15-day SBV chart with 240-min VMA). This reveals that there is a big chance of a trend reversal. We found that it was a safe to close all open put options and buy calls. We left "Buy Calls" trade opened in order to close it later if the index moves in our favor.
07/14/06	Buy Calls	The SBV Oscillator dropped below minus 33% and rallied to about that level back on July 14, 2006 around 10:40 EST (see NASDAQ 100 15-day SBV chart with 240-min VMA). This reveals that there is a big chance of a trend reversal. High-magnitude buying surges were noted in all market sectors. The NASDAQ 100 (1/10) PVO was 39.3%, indicating that the volume seen on this day exceeded the average volume over the previous 10 trading days by 39.3%. The (1/10) PVO for S&P 500 was 15%, for the Dow Jones Industrial it was - 16%. On this day the call we bought on July 13, 2006 dropped in price to $0.90 per contract and we decided to strengthen our position by buying cheaper then we had bought earlier calls.
07/20/06	Sell Calls Buy Puts	SBV oscillator railed above plus 33% and dropped below that level backon July 20, 2006 around 10:00 EST (see NASDAQ 100 15-day SBV chart with 240-min VMA). This reveals that there is a big chance of a short-term correction down. We found that it was a safe to close all open calls options and buy puts. We left "Buy Puts" trade opened in order to close it later if the index moves in our favor. We expect top close "Buy Puts" trade once the SBV Oscillator drops below minus 33% and then advances to about that level back (based on NASDAQ 100 15-day SBV Oscillator chart with 240-min VMA)

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
07/13/2006	Buy QQQIK Calls	$37	Sep. 2006	90	$1.30	-$11,700
07/14/2006	Buy QQQIK Calls	$37	Sep. 2006	130	$0.90	-$11,700
07/20/2006	Sell QQQIK Calls	$37	Sep. 2006	220	$1.10	+$24,200
07/20/2006	Buy QQQUK Puts	$37	Sep. 2006	90	$1.25	Open Position

7/20/2006
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