An Introduction to Candlesticks for Options Using Nison Candlesticks as the Foundation to your option trading

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Emerald Ami Greene
6 years ago
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1 Using Nison Candlesticks as the Foundation to your option trading, CMT President: Candlecharts.com

2 Candlestick Benefits Easy to Understand Early Reversals Safety First East + West All markets All Time Frames 1

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4 ANATOMY OF THE CANDLESTICK LINE high close Shadow Real Body open open low close Real Bodies / Shadows 3

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6 Who s in control? Who s in control? 5

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8 Negative Selection Good buy? 7

9 Nison Candlesticks for Exiting I find that the candlesticks are wonderful for EXITS. I use candlesticks to tell me to get out 8

10 Get into a new trend before other traders see it 9

11 Basic Criteria Market in a downtrend Small real body (either color) at, or near, top of range. Lower shadow at least 2x height real body 10

12 HAMMER AND BULL SHADOWS 11

13 Benefits of Options Leverage Risk Control Trade high price markets Easy to short Portfolio protection Can profit in any market environment Easy to change market stance Generate Income 12

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Leverage Buy at 144.50 Sell at 151.50 % gain on stock = 4.

15 Leverage Buy at Sell at % gain on stock = 4.8% $700 Buy ATM 145 call 14 days 3.25 Sell to close call 11 days later for 6.60 with 151 ½ % gain on options =103% $335 14

16 Candlesticks + Western Indicators Candlestick Charting Strategies Steve Nison s Trading Triad Success System Candlesticks + Trade Management 15

17 Four Basic Trades Buyer (long) CALL Right to buy PUT Right to sell Seller (short) Obligation to sell Obligation to buy Examples XYZ January 70 Call at $3.10: Call buyer can buy XYZ (up to expiration date) for $70. And call seller must sell to him at that price. ABC February 35 Put at $1.20 (Put buyer can sell XYZ (up to expiration date ) for $35. And put seller must buy it from him at that price. 16

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

18 Nison Candlestick strategies for long calls Scenario 1 buy at hammer $395: 400 $11.30 Exit at doji ( red arrow 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! 17

19 Direction blows away implied volatility Direction is the single most important thing you need to know to make money on any options trade 18

20 Implied Volatility vs. Direction AAPL 1) Hold IV constant at 26% and price +20% over 30 days 300: 60-day 300 call = $ : 30-day 300 call = $ ) Hold Price Constant at $300 and IV +20% over 30 days 300 strike 60-day call: = strike 30-day call: Vol 31.2% = Result: 20% change in price = +$47.40 (374% gain) 20% change in Vol = -$2.00 (15% loss) 19

21 Nison Chart Challenge #1 1) What are two times to consider a long put? 2) For each of these what would be your target? 3) For each of these what would be your protective stop? 4) When would you close out the long puts and why? 20

22 Candlesticks + Western Indicators Candlestick Charting Strategies Steve Nison s Trading Triad Success System Candlesticks + Trade Management 21

23 Nison Chart Challenge #2 1) In the boxed area above when would you consider a long call? 2) What is you protective stop? 3) What is your target? 4) When would you have closed out the trade and why? 22

24 S&P VIX 23

25 Bullish Bearish 24

Candles as resistance for option trading Scenario1: Long call at hammer Target = bear engulf resistance mkt @ 1775, 185 call @ 3.20 close out long call 8 days later @ 8.

26 Candles as resistance for option trading Scenario1: Long call at hammer Target = bear engulf resistance 1775, close out long call 8 days 8.00 with 1875 Scenario 2: Long put at 2nd bear engulf Target = hammer 1875, close out put 13 days 9.75 with

27 Using the What If Concept target Market holds a support area set with a bullish engulfing pattern. The target is a dark cloud cover at 51 ½ We are looking for a quick rally (within 10 days) Assuming we are doing a long call, should we do a 45 call or a 50 call? Successful test of support 26

28 What...If analysis for 50 call 50 call theoretical goes from 1.40 to 3.50 = 150% 27

29 What...If analysis for 45 call 45 call theoretical goes from 3.40 to 7.00 = 106% 28

30 Remember Implied Volatility! 29

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33 Use the highest high of those two sessions (top of upper shadow) as resistance 32

34 Candles and Momentum Trading Look at all the reversal signals 33

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Nison Candle strategies for portfolio protection Worried about a move to 178 area. Mkt @ 200 Buy a 30 day 200 put @ 6.

36 Nison Candle strategies for portfolio protection Worried about a move to 178 area. 200 Buy a 30 day Close out put at support at 178 with Paper loss on stock of $ $2,200 on 100 shares and made $1,560 on protective put 35

37 How NOT to use candlesticks Oh my goodness! The market rallied after the shooting star! 36

38 Candlesticks + Western Indicators Candlestick Charting Strategies Candlesticks + Trade Management 37

39 EAST & WEST CONFIRMATION Where a candle signal confirms a Western Technical signal 38

40 resistance doji 39

41 Bullish Engulfing Pattern at Support 40

42 Bull Call Spreads Buy lower strike (95) call Sell higher strike (100) call (same expiration) Which of these two strikes will be more worth more? So will be buying the more expensive lower strike call- and selling the cheaper call: Result is net cost to you - hence a debit call spread Concept: less costly way to buy call. But give up profit potential Buy 1 XYZ 30-day Sell 1 XYZ 30-day Net Debit (2.00) At expiration: Maximum Profit = Difference in Strike Prices (5) - Net Debit (2) = 3 Max Risk is net debit = 2 Breakeven = Lower Strike (95) + Net Debit (2) =

43 East + West = Increased Confidence Bull call spread at hammer (assume $1 strikes): Buy with 81 Sell 87 call (resistance Net debit = 1.95 Max profit = 4.05 BE= ) What are these candle signals? 2) What are they confirming? 42

44 Target Snap Buy Crack Stop 43

45 Nison Chart Challenge #3 1) What western signal is at the close of the session with arrow? 2) What is target 3) What is stop 4) What outright option, and strike, would you do and why. Assume $10 strikes 44

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47 What if you knew how solid support or resistance was, and by knowing this be rock solid confident about what outright or spread option strategy to use? 46

48 Your Special Thank You Bonus: $79 value Exclusive: Get Steve s FREE video showing exactly how he determines how strong support or resistance is. 47

49 Alert! This free offer may be withdrawn at anytime without notice 48

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

Nison Candlestick Secrets For Profiting in Options Presentedby Steve Nison President: candlecharts.com Quickly finding the best opportunities in the options markets Nison candlesticks for option strategies