Trade #1: S&P 500 (Nadex:US500) 11:03 a.m. entry: Short the >2118 strike for a $75.00 debit with the index price at $2,122.00.
The Nadex strike price of 2116 is the equivalent index market price of $2,126.48.
Results #1: Shares rose by 0.1% over four hours 39 minutes, or a +217% annual rate. The options produced a -237.1% loss on debit, for a -448,232% annual rate.
Exit Trade #1: 3:41 p.m.: For a $22.25 credit with the index price at $2,124.43.
Trade #2: S&P 500 (Nadex:US500) 1:02 p.m. entry Long the >2112 strike for a $58.00 debit with the index price at $2,120.99.
The Nadex strike price of 2112 is the equivalent index market price of $2,119.39.
Exit Trade #2 3:01 p.m.: For a $91.75 credit with the index price at $2,124.60.
Results #2: Shares rose by 0.2% over one hours 59 minutes, or a +752% annual rate. The options produced a 36.8% yield on debit, for a +162,471% annual rate.
TOTAL RESULTS: Shares on average rose by 0.14% over five hours 81 minutes, or a +380% annual rate. The options produced a 16.7% loss on debit, for a -44,131% annual rate.
Click on chart to enlarge.
|SPX at 3:47 p.m., 1 day 30-minute bars|
The alternative would have been to take the risk of remaining in the position until expiration, and that might well prove to have been the better course. Time (specifically, 20 minutes) will tell.
Trade #1 is marked in red, Trade #2 in blue.
-- Tim Bovee, Portland, Oregon, June 23, 2015
My trading rules can be read here.
Elliott wave analysis tracks patterns in price movements. The principal practitioner of Elliott wave analysis is Robert Prechter at Elliott Wave International. His book, Elliott Wave Principle, is a must-read for people interested in this form of analysis, as is his most recent publication, Visual Guide to Elliott Wave Trading.
Several web sites summarize Elliott wave theory, among them, Investopedia, StockCharts and Wikipedia.
See my post "Chart Analysis: Nomenclature" for an explanation of my method for labeling waves on the chart.
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Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.
No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.License
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