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>James wrote: Friday's close gave me a signal to buy oex calls. Although I
cannot reveal >the full methodology of my signal, it is confirmed by common
indicators such as a >stochastics turn up from oversold, an engulfing candle,
a nice position relative to the >support line at 873, and the fundamentals as
above. If the market rests or retraces on >Monday, calls can be bought into
weakness for a rally later in the week.
Hi James,
I couldn't agree more! I have support for the OEX at 874,
resistance at 902 and again at 913. I also like the Sept. expiration, and
agree that it may be possible to buy into weekness Monday (maby even
Tueasday).
My methodology is simpler than what has been posted here today. I
devide the portion of my trading capital that I plan to risk (using good
money management) into 3 or 4 equal amounts. My first order is a limit order
to buy placed before the opening with the limit splitting the last bid and
ask. (I some times lower the limit if I suspect the market will open down
based on Fair Value and/or the bond market). I follow this with the 2 or 3
remaining amounts, buying at specific points equally spaced down to the
support. For Monday these points would be OEX = 888.0, 881.0, & 874.0
(support). I select out of the money contracts trading in a range of $4-7 at
the open. Since I am using equal dollar amounts, I am buying more contracts
on each down move. Because I am still learning and experimenting, I don't
place large bets and usually end up with between 10 and 20 contracts.
If the OEX reaches support I place the last trade and set a stop
based on a % of the average price I paid. If it turns up before reaching
support, I stop buying and place the stop. If it gaps open and climbes a
significant amount I cancell the trade. I let profits run, but get prepared
to sell between 1 - 1.5 % increase in the OEX, either by adjusting my stop
up or placing a limit order. For Mon. that would be between OEX = 904.875 &
909.375. On rare occasions, if I see weekness after a 1 to 1.5 point gain on
my average option price I sell. I have had several occasions in recent
volital market where I have sold at this point in the AM and was able to buy
the same option at the same points in the PM!
I have been trading in this mannor for about 9 months now and 13
of 14 trades have been profitable. Any comments, anyone?
Good luck and good trading,
Ray Raffurty
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