Trade Selection Roadmap

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Jasmine Booth
6 years ago
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Figures and information provided refer to the past and past performance and are not a reliable indicator of future results.

1 Disclaimer The VectorVest Program ( the System ) which we promote is not intended to provide you with specific or personalized advice. In all circumstances where you are looking to apply the System to your own personal needs you should consider whether you should first seek advice from a suitably qualified investment professional. Figures and information provided refer to the past and past performance and are not a reliable indicator of future results. Where stocks are quoted in foreign currencies, returns may increase or decrease as a result of currency fluctuations. In the event that you, as a recipient of this presentation, have any doubts as to the suitability of the investments or services promoted you should seek advice from a suitably qualified investment professional. You should be aware that the value of shares and other stocks may rise or fall. The rules on tax can change, and these changes may have an influence on the effectiveness of the System in the future. It is for you, as the tax payer, to assess the System s effectiveness throughout the process. Some assets are more readily realizable than others, and you should bear in mind that it may be difficult to deal in or obtain reliable information about their value. You should always take account of dealing charges. In addition to any initial charge quoted there may also be a bid/offer spread or dilution. Investments in options and other forms of derivatives may expose you to a higher degree of risk given market circumstances relative to other forms of quoted investments. The System even if used in its entirety, cannot be guaranteed to provide specific returns in the short, medium or long term and you should bear in mind that individual securities may and can fluctuate considerably in value from day to day. The System has been designed without any reference to the specific interests of a particular investor. We reiterate, when using the System, you must take into account your own specific needs and liabilities. This financial promotion has been approved by European Financial Publishing Ltd trading as VectorVest UK which is authorized and regulated by the Financial Services Authority under Register No European Financial Publishing Limited is a company incorporated in Scotland under Company Number SC with its registered address at Exchange Tower, 19 Canning Street, Edinburgh EH3 8EH. 1

2 Trade Selection Roadmap 2

3 Module 3 Review 5 Key Principles Big Mistake To Avoid Action Items To Take 3

4 Trade Selection Roadmap Place trades at the wrong time 4

5 Can t find trades easily Don t know what to look for 5

6 Key Principles of Selecting Trades 1 6

7 Options Trades in general need to take advantage of longer moves in the market. As a result you need a longer term market timing signal. The Primary Wave is the most aggressive signal and results in many buy & sell signals I prefer using the DEW to trade options. It has fewer signals and keys you in to the longer moves more suitable to options trading. 7

8 The DEW signal consists of the DPO, Envelopes, and 30 period WMA. 8

9 On 11/13 we get a DEW Down Signal. This lets you know to be ready to turn bearish. To verify the signal, wait for follow-through. Look for two bars to have lower lows. 9

10 Only one bar had a lower low. No Bear Calls should have been taken. With a new DEW/Up we would try and initiate a Bullish Campaign as long as there is follow through. 10

11 New Down Signal. 1 st Lower Low 11

12 2nd Lower Low Confirms the signal. 12

13 DEW Up Signal Two higher bars with higher highs. Time to go long. 13

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19 DEW Up has been signaled and confirmed. 19

20 From the OptionsPro Advantage folder select Safe and Sound Options The most important aspect is that the stock is rising in price. 20

21 It broke the last level of resistance. Nothing holding it back. Stock is making new Daily Highs 21

22 Stock continued to rise. HSIC is also rising in price 22

23 And has broken resistance But It hasn t hit a higher high than the previous day! 23

24 Your last line of defense in trading is to make sure the stock is moving higher, day over day. HSIC stayed in a range and did not breakout for another month. This ties up your capital. 24

25 HD is moving higher and has broken the previous day s high. But it is right at resistance Better to wait 25

26 On 3/11 it is finally above resistance. Wait for follow-through the next day. Initiate the Long Trades 26

27 Smooth Sailing This was a quick test of the top 20 stocks on March 2. Let s take a closer look at the losers and see if you could have prevented a loss with your graph skills. 27

28 AYI is moving up, but is at resistance. It never got triggered, so no trade = no loss. 28

29 NKE is sideways, and at resistance. Stayed range bound. No trigger / No trade 29

30 RAI is looking good! Higher Highs and great graph. Confirmed Long on 3/3 30

31 Went up for a few days, but ultimately fell back down. This is why you sell Options. A Bull Put trade based on the and Strikes 31

32 Less than 30% Prob ITM Even though the stock went against you, you still made money. 32

33 DEW Down confirmed on 12/9. You can look to trade bearish. 33

34 Vern s Vultures Price adjusted to >100 A Quick Test of the Top 20 from the UniSearch. This is a short scan so the red results mean winning trades. Let s look at some examples of good graphs for selling. 34

35 PXD has topped and is holding the resistance. You just need to wait for the support level to be broken. It broke support with a lower low. 35

36 Off to the races VC cannot rally past resistance level. 36

37 It finally makes a lower low, breaking out of the range. Smooth Sailing as it moves lower. Just be patient and wait for the right trigger. 37

38 Let s focus on the ones that didn t work, and see if you could have prevented a loss. BXP is holding support, you have to wait. 38

39 BXP rallies and you never traded it. No Trade = No Loss AVB looks great, making lower lows and trading off previous resistance. 39

40 Find a Call to Sell with less than 30% Prob ITM. The 185/190 is better as it clears the 185 Resistance 40

41 The 190 / 185 Bear Call Spread Max Profit: $550 Max Risk: $4,450 If you would have exited at short strike price you lose $950 (in real-time) not $4,

42 Neutral Trades 42

43 ADX < 20 Overpriced Options Low ATR Target Options with Less than 20 Delta that exceed prior levels of support and resistance. Look for strikes up here. Look for strikes down here. 43

44 Delta of ~10 on both sides of trade. Strikes were chosen above resistance and below support. 44

45 Iron Condor is set. Max Profit = $1,090 (10 Contracts) Profit Target: Conservative: $ (25%) Aggressive: $545 (50%) Lets test it. 45

46 Both Profit Targets hit at 5 Trading Days Takeaway s for Bullish Positions 1. DEW Up in Place 2. Graph moving up in price 3. Clear of any resistance level 4. Make sure price is higher than previous day s high. 46

47 Takeaway s for Bearish Positions 1. DEW Down in Place 2. Graph moving lower in price, or coming off major resistance. 3. Clear of any support level 4. Make sure price is lower than previous day s low. Takeaway s for Neutral Positions 1. ADX is below ATR is Low 3. Identify where prior support and resistance are on graph. 4. Target strikes with Delta s < 20 and outside of prior support and resistance levels. 47

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49 IBM is moving up in a Bullish Market. Earnings changes the direction of the stock completely. 49

50 Add Earnings to your charts! 50

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52 Nasdaq.Com has a search to find the future and previous dividend dates. Pay attention to the Ex-Dates. Make sure you are clear of short calls. 52

53 As opposed to calls, an approaching ex-dividend date can be a deterrent against early exercise for puts. By exercising the put, the owner will receive cash now. However, this will create a short sale of stock if the put owner wasn t long that stock to begin with. So exercising a put option the day before an ex-dividend date means the put owner will have to pay the dividend. So if you ve sold a put, this means you may have a lower chance of being assigned early, but only until the ex-dividend date has passed. Brian Overby (The OptionsPlaybook) 53

54 5 An ETF, or exchange traded fund, is a marketable security that tracks an index, a commodity, bonds, or a basket of assets like an index fund. Unlike mutual funds, an ETF trades like a common stock on a stock exchange. ETFs experience price changes throughout the day as they are bought and sold. - From Investopedia 54

55 On the major markets such as the S&P 500 you can trade either the ETF (SPY) or Cash Index (SPX). Index Options are based on the same markets just settled in Cash with no stock. 55

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57 Market Index ETF S&P 500 SPX / ^SPX in OptionsPro SPY S&P 100 OEX / ^OEX in OptionsPro OEF Dow Jones DJX / ^DJX in OptionsPro DIA Nasdaq 100 NDX / ^NDX in OptionsPro QQQ Russell 2000 RUT / ^RUT in OptionsPro IWM Index Russell and S&P 57

58 ETF Russell and S&P SPX is 10 times the value of SPY. This is valuable if you trade large sized accounts 58

59 It s Condor Week Every week! You always have a 21 Day Window. The Pinnacle of Income Trading is Weekly Iron Condors on Index s as they provide large premiums and liquid options. If you have a larger sized account this is where you want to focus your attention. 59

60 1. Still use a day expiration 2. Exit before expiration week 3. Ideally, hold time is 7-10 days 60

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Getting Paid System Part 2. Module 2 Review The Market Up, Down & Sideways 5 Key Principles Big Mistake To Avoid Action Items To Take

Getting Paid System Part 2. Module 2 Review The Market Up, Down & Sideways 5 Key Principles Big Mistake To Avoid Action Items To Take Disclaimer The VectorVest Program ( the System ) which we promote is not intended to provide you with specific or personalized advice. In all circumstances where you are looking to apply the System to