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Our QQQQ Options Trades in March 2004:
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March 8, 2004.
- On March 3, 2004, a
"Call" Signal was generated. You can see the big
volume surge in the NASDAQ 100 index and the associated reversal
point very clearly ; as a result, a trading signal was issued by our
system.
- On March
8,
2004, a trade was
opened in accordance with the signal issued
three days prior. We bought QQQQ calls at $0.80 per contract.
- On March 26,
2004, the trade
was closed in accordance with our signal.
We decided to reduce the "Suggested Exit Price" and
close the signal for several reasons:
- We opened a trade in bad
position. As such, it's better to close the position and reconsider
our analysis so we can find out where the mistake was made and how
to avoid it in the future.
- The expiration for these
options contracts were approaching, which means that chances for
value of the contracts to move substantially higher will lessen and
that it would be difficult to close the position near its original
opening price.
- Our options signals are
generally only intended for a short-term trading. It is risky to
keep an options position open for more than one month.
- We are not afraid to show
a negative trade, since we couldn't have kept a 100% winning streak
forever. We think it's better to fix losses than wait for the
contracts to become worthless or of such low liquidity that it's
impossible to exit the position.
We sold our QQQQ calls at $0.20 per contract and
took a
75% losses.
March 30, 2004.
- On March 29, 2004, a
"Call" Signal was generated.
- On March
30,
2004, a trade was
opened in accordance with the signal issued
three days prior. We bought QQQQ calls at $1.60 per contract.
- On April 2,
2004, the trade
was closed in accordance with our signal. We
sold our QQQQ calls at $2.35 per contract and took a
47% profit.
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Information Corner:
Exchange Traded Funds (ETFs)
are index-based products. Each ETF holds a portfolio of securities that
approximates the price and yield performance of its underlying benchmark
index...
Options Trading - A "call option"
(or a “call”) is an option contract that gives the holder the right, but not the
obligation, to buy 100 shares of an underlying security within a certain time
frame...
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