Tuesday, December 8, 2009


Here's an explainer on the some of the abbreviations I use:

pps - Persons Proprietary Signal, a "black box" indicator developed by John Person and available on the ThinkOrSwim trading platform.

mfi - Money Flow Index, an open source indicator that uses both price and volume to track the flow of funds into and out of a stock.

rsi - Relative Strength Index, similar to the mfi, but it uses price only.

bb - Bollinger Bands, a trending indicator developed by John Bollinger.

ma - Moving average, an venerable class of open source trending indicators that use a trailing average of prices. My standards are the 20-day moving average (ma20) and the 200-day moving average (ma200). Day, of course, meaning trading day.

I often will describe the structure of a position using these abbrevisions:

p - put option
c - call option
s - shares

The p and c abbreviations are followed by a strike price. All three abbreviations can be preceded by a minus sign, indicating a short position (i.e., I sold the shares or options). The lack of a minus sign indicates a long position (i.e., i bought the shares or options).

So, a bull put spread might look like this:


meaning that I bought the 41-strike options and sold the 40-strike options.

An iron condor, composed of puts and calls with four strike prices, might look this:


And a triple vanilla iron condor smothered in hot fudge....

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