Re: [RT] setups

["BobR" <bobrabcd@xxxxxxxxxxxxx>]

Here is a rough draft from memory of how I traded 
it a few years back.  Some may recall statements being posted on 
rt.
It is a discretionary, read not proprietary and not 
coded, system.  Thus it may be difficult to duplicate, but here 
goes:
Requires a realtime datafeed, online broker with 
discount commissions, and realtime OPRA with no funny stuff like BMI used to do 
with options..Set up a chart with the 5 minute OEX in subgraph one.  TICK 
in subgraph 2 with 5 lines at zero, +400, -400, +600, -600.  Put the PREM 
in subgraph3 with the fair value, buy level, sell level lines, updated each 
day.  The CNBC levels worked good, the w.programtrading levels didn't and 
seemed to be more useful for breakouts than cycletrading.
1. Determine the daily trend of the OEX midpoint, 
or the pivot trend, has it been going up or down. 
2. Make entries using at the money or one strike 
out options in the direction of the trend, but make the entries on 
pullbacks against the trend, thus your entries are in sync with the MM's and not 
the general public. 
2a. Trades can be made against the trend with lower 
expectations of profit.
3. Apply classical pivots and fib pivots to the 
OEX. Use a combination of the standard daily pivot and S/R levels along 
with the FibonacciTrader half range, 0.618 range, range levels for "fuzzy" entry 
levels, meaning close enough is good enough.  Some days the standard S/R 
levels are hit and other days the FT levels are dominant.  Seems to very 
depending on whether everyone is trading or if there is a holiday period coming 
up or just finishing.
4. Wait ~30 minutes after the cash open to make the 
first trade.  
5. Visualize a time sector at the top of the hour 
and bottom of the hour(using a circular 12 hour clock).
6. Enter puts in the time sector at the 
top of the hour and enter calls in the time sector at the bottom of the 
hour.  This puts the odds in your favor of being profitable for a short 
period of time.  You might use a fast oscillator as price approaches an S/R 
level, I didn't.
6a. Toggle the bid/ask quotes during the time 
sector and watch for a change or peak in sentiment.
7. Monitor the TICK and PREM to determine the 
quality(inhalation/exhalation) of price trend during those sectors and as 
confirmation of intraday trend change.  There is a dominant 30 minute half 
cycle in existance on many days.
   When the power players are in the 
game, the sector is wide(~+,- 10 minutes) and you can see money coming in 
and leaving at the top and bottom of the hour plus minus about ten 
minutes.  When the sector is narrow(~+,-6 minutes) and the prem and tick 
are inconclusive the trend is weak and there might not be enough followthrough 
to be profitable.  Put entries on strong bullish days come after 
the top of the hour, and on weak days the deterioration begins before the top of 
the hour.  Likewise for calls at the bottom of the hour.
8. Trade 5 contracts to start with and set a 
minimum daily goal of $500.
9. Look for a one point gain from the Ask 
entry to the Bid exit(only trade long calls and long puts).  Once you get 
the one point gain, don't give it back.  Move your stop as the option goes 
more in the money.
10.  Don't hold overnight, and especially 
don't hold over weekends or holidays to avoid time decay, volatility change, and 
premium adjustments.
11.  Increase the number of contracts as the 
account grows.
12.  Don't overtrade, two to four roundtrip 
trades would not be overtrading.
 That's pretty much it.  Grind it out day 
after day.  Use stops based on the option premium.  Since you are 
daytrading, time decay will not be significant unless you get into or out of a 
trade too close to the open or close of the day when they are adjusted.  Be 
wary of premium changes on Friday close and Monday open.  Thus wait at 
least 15 to 30 minutes after the open and be careful going into the close.  
If the trend is strong and with your trade you can play closer to 
the close.  This is more significant during expiration week which gives you 
the best trades because of the gamma effect.  Just be sure you know what 
you are doing and what the name of the game is.  No doubt there will be 
controversy about this system, and it could be improved with additional timing 
tools.
 
bobr
 
 
<BLOCKQUOTE 
style="PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
  ----- Original Message ----- 
  <DIV 
  style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black">From: 
  Ray 
  Raffurty 
  To: <A title=realtraders@xxxxxxxxxxxxxxx 
  href="mailto:realtraders@xxxxxxxxxxxxxxx";>realtraders@xxxxxxxxxxxxxxx 
  
  Sent: Sunday, January 05, 2003 3:08 
  AM
  Subject: Re: [RT] setups
  
  Hi Bob,
   
  You wrote  "<FONT face="Courier New" 
  size=3>I had an options system that could quintuple the account in 5 weeks of 
  OEX trading.  It was so boring I quite trading it.
  <FONT face="Courier New" 
  size=3> 
  Sent it to me 
  {;-)
  <FONT face="Courier New" 
  size=3> 
  Good luck and 
  good trading,
  <FONT face="Courier New" 
  size=3> 
  Ray 
  Raffurty
  
  <BLOCKQUOTE 
  style="PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
    ----- Original Message ----- 
    <DIV 
    style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black">From: 
    <A title=bobrabcd@xxxxxxxxxxxxx 
    href="mailto:bobrabcd@xxxxxxxxxxxxx";>BobR 
    To: <A title=MedianLine@xxxxxxxxxxxxxxx 
    href="mailto:MedianLine@xxxxxxxxxxxxxxx";>MedianLine@xxxxxxxxxxxxxxx ; <A 
    title=realtraders@xxxxxxxxxxxxxxx 
    href="mailto:realtraders@xxxxxxxxxxxxxxx";>realtraders@xxxxxxxxxxxxxxx 
    
    Sent: Tuesday, January 07, 2003 2:19 
    PM
    Subject: [RT] setups
    OK, this is the setup I am looking at for a long 
    exit/short entry.  Todaymarks the 4th day of a positive NDX net 
    percent up down volume (up -down)/total.  A lower high on the 4th 
    bar of a 4 bar set with a higher highon the NDX may be a prelude to a 
    down day the next day...at least that isthe thesis being examined.  
    Perhaps it is reinventing the wheel, butdiscovery sure is fun as is the 
    journey.  I had an options system that couldquintuple the account 
    in 5 weeks of OEX trading.  It was so boring I quitetrading it, 
    |;-) .bobrTo unsubscribe from this group, send 
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