A Plethora Of Trades

By: Stock Barometer | Sun, Oct 12, 2008
Print Email

10/12/2008 11:02:05 AM

This week we use our ideas to determine the best trade for the current markets.

Here's this week's bonus issue of Stock Options Speculator. If you'd like to receive this article on a weekly basis, and get all our special reports where we identify the best options plays for Investors Business Daily and other popular stock advisory services, please click here.

As the Crash of 2008 unfolds, new opportunities present themselves. This week we'll divert a little from our previous format, but the conclusions are pretty interesting.

SOS Timing Indicator

No one knows the future. In trading we predict future movement from past actions and establish our bets accordingly. This week, as in the past, suggests a potential for a rapid advance, however, with the high volatility, normal options trading is out the window. We'll show you that as we walk though our ideas.

Stock Options Speculator uses the above indicator in the establishing of various options trades and strategies. The indicator has two frames. The top frame shows the Nasdaq Composite and the Nasdaq Advances and Declines. The lower frame shows volatility (candles) and the Trading Index (blue line). The height of the indicators (as noted) determines if call or put buying strategies are recommended.

Options Trading Ideas

Normally, we start with our primary call (or bull call spreads) or put (or bear put spreads) options ideas. However, given the fact that we've been looking for a bounce and not getting it, this week I'll show you where we are on a call and put basis alone:

As you can see from the above chart, the amount of stock price movement that you need to profit from the trade is pretty high. As for Puts:

Well, it's pretty much the same thing. Can we smooth it out by looking at spread trades? Well, here are the Bull CAll Spreads:

Still not too enticing. How about Bear Put Spreads?

More of the same... Why? Well, with the current state of volatility, implied volatilities are through the roof. So recommending pure call or put plays or even spreads are pretty pricy options at this point.

But there are ways to profit from High Volatility. They're called the Bull Put Credit and the Bear Call Credit.

Here are the Bull Put Credit Ideas:

This strategy is to realize a profit by making cash that is a net credit formed by the difference in a SOLD PUT price and a BOUGHT PUT price. While the stock goes up, the investor keeps the net credit (difference in premiums).

Let's look at Bear Call Credits:

This strategy is to realize a profit by making cash that is a net credit formed by the difference in a SOLD CALL price and a BOUGHT CALL price. While the stock goes down, the investor keeps the net credit (difference in premiums).

After all of that, I'd say that there is a way to put some premium in your accounts and would go with the Bull Put Credit Spreads until volatility subsides...

Based on the SOS Timing Indicator or other special market conditions, the above 10 trades are recommended for consideration in your trading plan.

Risk Graphs

The following risk graphs show stock price plotted against potential profitability. They're listed alphabetically.

There are toomay potential trades to show all the risk graphs for this week, however, if there are any that are of specific interest, email me during the week and I'll send them out in a special update.


Closing Bell

Well, there are so many variables to this current market that suggests a wait and seestrategy will work best until more predictable conditions return. However, for the most aggressive players - these times truly hold some incredible opportunities. I hope I've given you some ideas to go off and face the week ahead...

Again if you like any of the trades and would like to see the risk graphs,just send me an email and I'll send it out in a special report.

Regards,

 


 

Stock Barometer

Author: Stock Barometer

www.stockbarometer.com

Stock Barometer is completely independent. We have never and will not ever accept compensation from any company whose stock we recommend.

Our goal is to make you money. We offer you the tools and information to do so and leave it to you, the individual investor, to apply them in the best way possible.

Important Disclosure: Futures, Options, Mutual Fund, ETF and Equity trading have large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in these markets. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to buy/sell Futures, Options, Mutual Funds or Equities. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this Web site. The past performance of any trading system or methodology is not necessarily indicative of future results.

Performance results are hypothetical. Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not actually been executed, the results may have under- or over-compensated for the impact, if any, of certain market factors, such as a lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown.

Investment Research Group and all individuals affiliated with Investment Research Group assume no responsibilities for your trading and investment results.

Investment Research Group (IRG), as a publisher of a financial newsletter of general and regular circulation, cannot tender individual investment advice. Only a registered broker or investment adviser may advise you individually on the suitability and performance of your portfolio or specific investments.

In making any investment decision, you will rely solely on your own review and examination of the fact and records relating to such investments. Past performance of our recommendations is not an indication of future performance. The publisher shall have no liability of whatever nature in respect of any claims, damages, loss, or expense arising out of or in connection with the reliance by you on the contents of our Web site, any promotion, published material, alert, or update.

For a complete understanding of the risks associated with trading, see our Risk Disclosure.

Copyright © 2004-2014 Investment Research Group, Inc.
d/b/a www.Stockbarometer.com. All Rights Reserved.

All Images, XHTML Renderings, and Source Code Copyright © Safehaven.com

SEARCH





TRUE MONEY SUPPLY

Source: The Contrarian Take http://blogs.forbes.com/michaelpollaro/
austrian-money-supply/