Just found out that Options University is holding a free webinar on Technical Analysis tomorrow night. Options University is the best place I’ve found to learn about options trading and technical analysis is key for trading options. These webinars fill up pretty fast so not sure if there’s still room but definitely worth a shot.
Support and Resistance are basic concepts everyone should understand. But, I remember back when I first was introduced to support and resistance I had a lot of questions and was unsure where I was seeing support and where resistance.
Last night I was roaming around You Tube and and found a bunch of great videos about trading so want to share them we you guys. The video posted below is from the Informed Trades site which I have yet to explore but judging from this video alone, looks pretty good to me — and from what I can tell is FREE!
This is a short video that does a great job of explaining and illustrating support & resistance. Look for me to post more videos soon.
The chat is about to begin, I’ll post my notes but these things move pretty fast so I’m not always able to get everything. I’m also just posting things that I think are significant, so I recommend if you want more detail listen/watch it on the chat archive at the Think or Swim site. They now are archiving the video as well! So, though it’s not live it’s still incredibly valuable as a recording.
These notes may be Think or Swim specific in some areas but hopefully are standard enough to be available at most brokers.
Today’s chat was basically about how to trade in market like this one (volatile, unpredictable, holiday weekend.. yada, yada, yada..) And, what they we’re saying is that this not a bad time for covered calls and naked puts (naked puts — only if you want the stock anyway. I have a post coming up about naked puts).
Covered Calls
Show Covered Return column on Trade Tab. “Covered Return” is the return you would get if you sold that covered call every month (annualized) — not the return for this particular month
Find a stock that’s been under a lot of selling pressure or reached a level of support. Also, look for a reasonable level of volatility.
Buy the nearest OTM call in the nearest month with at least 20 days to expiration
Naked Puts
Same criteria for covered calls above but check the “covered return” for selling naked puts instead. It may be significantly higher and/or the trade may end up costing you less since you’re not buying the stock but tying up capital in case you’re assigned.
If you’re not assigned you get to keep the premium — love that!
If you are assigned then you got the stock at cheapo price and the premium you received pays for part of the stock — not a bad deal if you ask me..
Candestick patterns should be considered in conjunction with the preceding trend. For instance, a Bullish Engulfing pattern is significant AFTER a downtrend. A Bearish Engulfing pattern is significant AFTER and uptrend. In other words, these are not significant following a sideways movement.
Bullish Candlestick Notes:
Dojis mean the stock is neutral — they’re not a confirmed signal to sell short
Hammers are bullish but need a confirming indicator
Shooting Stars are bearish especially if you see two in a row
Bullish Engulfing pattern (1st on left) definitely need a preceding trend to interpret — see above paragraph
Just attended a webinar on finding stocks that are primed to go ballistic. Here are my notes:
Price is above the 10, 50, 200 day moving averages
Trade with the larger, longer term trend — moving averages help you do that
Look for short corrections in a longer term trend
Look at stock’s volume relative to its normal volume. If it has 3 times it’s normal volume in the first hour of the day — it’s primed to move
Look for the three moving averages to meet at a point. When moving averages start to separate and stock is above the 10 day, watch it very closely. This is likely a reversal signal.
