Update 4 - Our Trades on the Nasdaq 100 Mini Index - TAKE SOME PROFITS!

By: Patrice Johnson | Mon, Jul 14, 2008
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7/13/2008 1:38:53 PM

Greetings, J.E.D.I.,

Welcome to The J.E.D.I. Trader.

To learn more about my Stocks, Options & Options on Futures Trading Service, click here.

LONG TERM TREND SIGNAL: DOWN

INTERMEDIATE TERM TREND SIGNAL: DOWN

STOCK, OPTION, OR FUTURE UNDER ANALYSIS:

NASDAQ 100 MINI INDEX SEPTEMBER 2008 2100 CALL AND SEPTEMBER 2008 1700 PUT

TICKER SYMBOL FOR SEPTEMBER 2008 NASDAQ 100 MINI 2100 CALL OPTION: NQU82100C

TICKER SYMBOL FOR SEPTEMBER 2008 NASDAQ 100 MINI 2000 CALL OPTION: NQU82000C

TICKER SYMBOL FOR SEPTEMBER 2008 NASDAQ 100 MINI 1700 PUT OPTION: NQU81700P

EXPIRATION DATE OF OPTIONS CONTRACT: SEPTEMBER 19, 2008

EXPIRATION DATE OF FUTURES CONTRACT: SEPTEMBER 18, 2008

TICK SIZE: 1 point = $20.00

INITIAL MARGIN: $2750

MAINTENANCE MARGIN: $2200

FIRST NOTICE DAY: Not Applicable (N/A) - Nasdaq 100 Mini Index is cash settled.

This e-mail is to alert you to take profits of $720.00 ($691.40 after $28.60 in commissions) by buying to close one September 2008 2100 Call Option (Ticker Symbol: NQU82100C) at a limit price of $7.50 or as close to $7.50 as possible) that we sold short on Monday, June 16, 2008 at $43.50 AND THEN place another order to sell to open one September 2008 "2000" Call Option (Ticker Symbol: NQU82000C) at a limit price of $23.25 (or as close to $23.25 as possible) AND maintain our open put position on the Nasdaq 100 Mini Index Options.

Total Proceeds received at expiration if the September 2008 Nasdaq 100 Mini Index trades above 1700 and below 2000 and we are able to buy to close ticker symbol NQU82100C at $7.50 on Monday, July 14, 2008 is $2281.40 (or $1532.80 after $57.20 in commissions) - That includes: $841.40 after commissions of $28.60 if NQU8 trades above 1700 and below 2000) plus $691.40 (if we are able to close short position (ticker symbol YMU8 2100C) at $7.50 that we sold short at $43.50 on June 16, 2008).

This amounts to $383.20/month in additional income (for the trading period of June 2008 to September 2008): $1532.8/4, after commissions)

Our breakeven points before this trade losses money is as follows:

Our breakeven point for selling short the September 2008 2000 Call Option at $23.25 is $2021.82. That is this position will begin to lose money if the Nasdaq 100 Mini Index rises above $2021.82. (Assuming of course, we receive $23.25 on Monday, July 14, 2008 for selling short the September 2008 2000 Call (Ticker Symbol: NQU82000C). Nevertheless, try to get $23.25 or as close to $23.25 as possible.

Our breakeven point for selling the September 2008 1700 Put option at $20.250 is $ 1681.18 That is this position will begin to lose money if the Nasdaq 100 Mini Index falls below $1681.18 ($1657.93 if we maintain the new call option referenced above)

STATUS REPORT OF OUR POSITIONS IS BELOW:

WEEK 4 (7/13/2008): +$145.00 (+$after commissions of $28.60 if we offset both positions today.)

September 2008 NASDAQ MINI INDEX 2100 Call Option: +$720.00 ($43.5 minus $7.50)

September 2008 NASDAQ MINI INDEX 1700 Put Option: -$575.00 ($20.25 minus $49.00)

Difference: +$145.00 (+$116.40 after commissions of $28.60)

NOTE: If we only sold the the call option, our position would show a gain of $720.00 for week 4. If we only sold the put option, our position would show a loss of $575.00. However, because we sold both the call option and the put option, our account for the fourth week ending July 13, 2008, shows a gain of $145.00 ($116.40 after $28.60 in commissions).

Next week, we can expect to see the Nasdaq 100 Mini Index rise because of a slight price/RSI divergence on the daily chart. (not shown). However, this index is not yet oversold and we could therefore witness some more down and up reactions before expiration.

However, as long as prices on the Nasdaq 100 Mini Index (Ticker Symbol: YMU8) trades above 1700 and below 2000, our total proceeds received by the September 2008 expiration will be $2281.40 (or $1532.80 after $57.20 in commissions).

My fellow J.E.D.I.,

Please see weeky chart below the the NASDAQ 100 MINI INDEX dated July 11, 2008.

WEEKLY CHART

So buy to close one September 2100 Call Option (Ticker Symbol: nqu82100c) at $7.50 limit or as close to $7.50 as possible and sell to open one September 2008 2000 Call Option (Ticker Symbol: nqu82000c) at $23.25 limit (or as close to $23.25 as possible and watch the following breakeven price levels on the NASDAQ 100 MINI INDEX:

$2021.82 for the September 2008 "2000" Call option we will sell short on July 14, 2008 and $1637.68 for the September 2008 1700 Put option we sold on June 17, 2008.

Good Luck!

And may the force of volatility will be with you.

Best Regards,

 


 

Patrice Johnson

Author: Patrice Johnson

Patrice V. Johnson
The J.E.D.I Way

Patrice V. Johnson

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