Candlestick Secrets for Profiting in Options Seminar Nison Candlesticks to Guide Your Option Trades. Nison Chart Challenge 7 - Read Steve s Mind

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Godwin Reeves
6 years ago
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1 Nison Chart Challenge 7 - Read Steve s Mind 1) How could we have used NCS after the first hammer to find a good trade set up and decrease time decay? 2) What outright or spread could we have done? 3) When would you have exited and why? 33a

2 Nison candlesticks for options timing When I see doji I begin to worry because I know a direction change is coming. 34

3 The Bull Candlestick Signals Hammer Bullish Engulfing Pattern Bull Sash Piercing Pattern Bull Harami Etc. 35

Nison Candlesticks for long calls Scenario 1 buy at hammer Mkt @ $395: 400 call @ $11.30 Exit at 2 nd doji (13 days after hammer) mkt @ 447: 400 call @ $47.

4 Nison Candlesticks for long calls Scenario 1 buy at hammer $395: 400 $11.30 Exit at 2 nd doji (13 days after hammer) 447: 400 $47.50 (320 % return) Scenario 2 buy based on MACD $418 : 420 $13.45 Exit at doji (5 days later) 447: 420 $31.20 (132% return) Result: Nison candlesticks generated over 2x the profit! 36

5 Nison Candlesticks for long calls Doji as resistance. But if closes over doji, then market is refreshed and can work with long option strategies Breakout! Buy a call. No need to limit profit potential Which call to buy is largely determined by target 37

Nison Candle strategies for bull call (debit) spreads Market @ 532: Buy 530 call @ 19.20 Sell the 540 or 550 call? Let s do the math: S 540 call @ 14.70 so debit= 4.

6 Nison Candle strategies for bull call (debit) spreads 532: Buy Sell the 540 or 550 call? Let s do the math: S so debit= 4.50 Max profit: difference in strikes less debit = 5.5 B.E: lower strike + debit= Break over resistance confirms successful test of bottom end of range: S so debit= 8.20 Max profit = 11.8 B.E =

7 Nison Candle strategies for bull put (credit) spreads : 1 of 3 Sell Buy 290@ 5.90 Credit = 4.40 BE= has to stay over If market rallies or sells off let s see what we can do with this credit. Let s see rally first Not a strong reversal candle 39

8 Nison Candle strategies for bull put (credit) spreads : 2 of 3 Have a credit of 4.40 More bullish with market at 303 so now spend the $4.40 to buy a But what if market breaks support?... Next session get more confident 40

9 Nison Candle strategies for bull put (credit) spreads : 3 of 3 With bull put spread have long & short put. Now can leg out of 300 short put to be net long 290 put to take advantage of new bear outlook Will detail more about this strategy in the Trade Management session Beaks support 41

10 The Bear Candlestick Signals Shooting Star Bearish Engulfing Pattern Bear Sash Dark Cloud Cover Bear Harami Etc. 42

11 Nison Candlestick strategies for long puts Looking for move to area. Buy 12 ½ Cover Or

12 Nison Candle strategies day trading options Plus: No overnight risk IV less concern Minus: bid/offer spread Buy 4 day 32 ½ 1.05 Close Exit out at@ for

13 With bear moves implied vol. usually increases (fear factor) With bull moves implied vol. usually stays flat or decreases (complacency factor) Let s see what this means for our candlestick option strategies 45

14 Nison Candlestick strategies for bear option trades IV may be back to normal levels. May be too late to do the trade- could be spike in IV target 46

Nison Candlestick strategies for bull option trades 1) Aggressive: Mkt 1015: buy 1030 7- day call @10.

15 Nison Candlestick strategies for bull option trades 1) Aggressive: Mkt 1015: buy day Exit 5 days: mkt ) Conservative: Mkt 1015: buy day Exit 5 days: mkt IV may not have spiked 47

Nison Candlestick strategies for bear option trades Target: 75 area. Mkt @ 79.50 Buy 80 put @ 3.

00 BE= 80-2=78 Max profit: 3.00 This theoretical pricing assumes unchanged IV.

16 Nison Candlestick strategies for bear option trades Target: 75 area Buy , close 5.70 Bear put spread Buy Sell BE= 80-2=78 Max profit: 3.00 This theoretical pricing assumes unchanged IV. But more likely to see a spite in IV during selloff If do this bear put spread won t be able to take advantage of potential IV spike as you would with a put 48

17 I was long a stock and saw bearish candles so I bought a put to protect my position. Being able to employ some defensive timing measures REALLY reduces my anxiety The candles provide the final piece before I initiate a defensive call/put position the gun is loaded and primed, but candles provide the spark for detonation. NO SIGNALNO ACTION 49

Use Nison candlesticks for pinpoint timing entering and

18 Nison Candlesticks for Portfolio Protection How can I boost or preserve profits even when my core markets are falling? Use Nison candlesticks for pinpoint timing entering and exiting covered calls and protective puts Steve Nison s Candlecharts.com 50

19 Examples of when to protect portfolio: Bearish candlestick Bearish western indicator At resistance (especially with bear candlestick) Falling off the roof 51

20 Covered call: Selling (or writing) calls while at the same time owning an equivalent number of shares of the underlying instrument. Protective Put: Buying puts while holding shares of the underlying stock. 52

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22 Remember: If you are scared about a major moveexit the position! 54

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24 What defines a trend? Higher highs and higher lows Chart of higher degree Price above a moving average Dual moving averages and use golden and dead crosses 56

25 Overview: Covered calls compared to long puts Puts when: IV is not too high compared to what is normal Don t want to worry about being called away by using a covered call. Worried about a big move call premium not protect enough Pure insurance Covered calls when: Income generation Expect choppy market IV is overextended Time decay in your favor High price market makes longs puts too expensive 57

Deeper ITM more expensive, but higher delta OTM may not help much, due to lower

26 Nison Candle strategies for portfolio protection Long this market and want to buy a put How much protection do you want? Deeper ITM more expensive, but higher delta OTM may not help much, due to lower delta ATM have 50% delta which gets larger as options becomes more ITM. Note: Can get 100% delta by doing 2 ATM puts. 58

27 Nison Candle Strategies for portfolio protection Use the precision timing of Nison candles to help avoid giving up profit potential by doing a covered call or protective put prematurely. 59

Nison Candle strategies for portfolio protection Have SP in retirement account. Worried about a move to 126.

28 Nison Candle strategies for portfolio protection Have SP in retirement account. Worried about a move to Buy a 30 day Cover at support at 126 $10 Paper lose on mkt of $1200 on 100 shares and made $670 on protective put 60

29 Nison Candle strategies for portfolio protection I owned GS. I bought 5 Sept 160 puts to cover my 500 shares of GS when the stock was at 168. The put cost me In 10 days the stock was at 158, a paper loss of $5000. The put gained $1500. Support area 61

30 Nison Candle strategies for portfolio protection Initiate long put or covered call Candle pattern (such as doji) as resistance Exit protection (may want to give a few sessions due to possibility of Falling Off the Roof pattern) 62

31 Nison Candle strategies for portfolio protection What are two reasons to exit protection? Doji at resistance 62

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33 Nison Candle strategies for portfolio protection Reversal candle Western support area or bull candle closed out short calls or long puts (how many depends on confidence level (i.e. strict candle criteria, western confirmation) 64

Nison Candle strategies for portfolio protection Looking for temporary move 31.50 Mkt @ 33.25 buy 32.5 put @.

34 Nison Candle strategies for portfolio protection Looking for temporary move buy 32.5 Reached target but no reversal signals (worth 1.60) So ride it down to at bull engulf

Nison Candle strategies for portfolio protection You re long 100 shares of the market, Nison Candle Scanner alerts you to bear engulf @625.

35 Nison Candle strategies for portfolio protection You re long 100 shares of the market, Nison Candle Scanner alerts you to bear Worried next support starts at top of window near $590. With 625 sell 630 At morning star call 595. Close 6.00 =13.25 profit on call (but did have a paper loss of $35 on your market) 66

Candlestick Secrets for Profiting in Options Seminar Nison Candlesticks to Guide Your Option Trades

Candlestick Secrets for Profiting in Options Seminar Nison Candlesticks to Guide Your Option Trades I was long a stock and saw bearish candles so I bought a put to protect my position. Being able to employ some defensive timing measures REALLY reduces my anxiety The candles provide the final piece before