3/12/2016 PROPRIETARY INDICATORS PINPOINT MARKET TRADES WENDY KIRKLAND ELEMENTS OF SUCCESSFUL TRADING: STOCKS, OPTIONS, FUTURES, FOREX

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1 PROPRIETARY INDICATORS PINPOINT MARKET TRADES By Wendy Kirkland WENDY KIRKLAND Full Time Trader 11 years Administers -7 Advisories Author: Option Trading in Your Spare Time- Basics Stress-Free Wealth Building Basics P3 System Long Strategy Price Surge System Swing Trades Wealth Building with Weekly Options- Short Time Frame Strategy 1-3 days average Prime Entry Profits Day Trade Strategy & Chatroom WendyKirkland.net ELEMENTS OF SUCCESSFUL TRADING: STOCKS, OPTIONS, FUTURES, FOREX Pinpoint Equities with Consistent Big Moves Zero in on Equities that are Over-Bought or Over-Sold Find Equities that have Formed a Top or Bottom, have Reversed and Started a New Trend Enter Trades that have Given a Confirmed Entry Signal 1

2 EXACTLY WHAT IS AN OPTION? Two Types: Call options- give you, the buyer the right to require the grantor to sell the equity to you at the agreed price at an agreed upon time (no matter how high the price is when you decide to sell your option). They must sell it to you at the agreed upon price and you in turn sell it for the higher price and keep the difference). The buy and sell happens behind the scenes for you when you close the trade. Put options- give you, the buyer the right to require the grantor to buy the equity from you at the agreed price at an agreed upon time (no matter how low the price is when you decide to sell your option. They must buy it from you at the agreed upon price and you in turn buy it at the lower price and keep the difference). The sell and buy happens behind the scenes for you when you close the trade. EXAMPLE OF OPTION PRICING If you purchase options on Boeing (BA), the aerospace company, and its stock is priced at $150. You are interested in contracts for the 150 strike because you feel the price is ready to move up. You pay $3 per share for the 100 share Call contract that expires in two months for $300 per contract. You buy 2 contracts for $600. The stock price goes up to $155 and your premium is now $7 per share when you decide to sell. The transaction happens behind the scenes at the exchange you paid $3 and sell for $7 and keep the $4 per share difference. You have 200 shares and realized a $800 gain on your $600 total investment for the 2 contracts or 133% FIND EQUITIES WITH BIG MOVES AVERAGE TRUE RANGE - ATR 2

3 CREATE A WATCH-LIST OF EQUITIES WITH BIG MOVES PROPRIETARY INDICATORS - KIRKLAND COMMODITY CHANNEL INDEX (CCI) KIRKLAND PERCENTAGE PRICE OSCILLATOR PPO 3

4 KIRKLAND OSCILLATOR CONFIRMS ENTRY PUTTING IT ALL TOGETHER TRADE SET-UP FROM THE START 4

5 WHAT HAPPENED NEXT? TRADE ENTRY TRADE EXIT 5

6 TRADE RESULTS A 2.5-4% equity price move often equates to a double in a weekly option s premium. 10% move often equates to a double in a monthly option s premium. (This is why you want to trade stocks with high ATR.) Example: Visa (V) Purchase calls after open on October 5 when Kirkland Oscillator crossed through touch zone for 2.90 a share or $290 per contract for the Jan strike Call. Let s say we bought 2 contracts for total investment $590. We sell at end of day on Nov 27th, the call contracts were worth $7.55 or $755 total per contract for a gain of $465 each for the 2 contract or $930 or 160% Visa s price when we enter the trade was $71.06, when we sold it was $79.84 so a $8.78 change in price. That is a 12% increase in the stock s price over the trading period, while the option increased 160%. For an investment of $590, we controlled $14,212 worth of Visa stock. Had we placed that same stock investment in options, we could have purchased 49 contracts and earned $22,785 profit. This is a good example of a moderate price move in a stock s price results in big gains in the option s premium. ANOTHER TRADE EXAMPLE WHAT HAPPENED NEXT? 6

7 PRICE IS SETTING UP AGAIN- MORE THAN A MONTH LATER. TRADE ENTRY TRADE PLAYS OUT 7

8 Example: Allergan (AGN) Purchase calls after open on October 26 when Kirkland Oscillator crossed through touch zone for a share or $1,740 per contract for the Dec strike Call. Let s say we bought just 1 contracts for total investment $1,740. We sell at end of day on Nov 4th, the call contracts were worth $40.30 or $4,030 total for the contract for a gain of $2,290 or 132% Allergan s price when we enter the trade was $265, when we sold it was $307 approx. so a $42 change in price. That is a 16% increase in the stock s price over the trading period, while the option increased 132%. For an investment of $1,740, we controlled $26,500 worth of Allergan stock. Had we placed that same stock investment in options, we could have purchased 13 contracts and earned $29,770 profit. Again, this illustrates the leverage of options. LET S LOOK AT A PUT TRADE WHAT HAPPENED? 8

9 PUT TRADE RESULTS Example: Newmont Mining (NEM) Purchase puts after open on June 5th when Kirkland Oscillator crossed through touch zone for $1.25 a share or $125 per contract for the Sept 25 strike Call. Let s say we bought just 5 contracts for total investment $625. We sell at end of day on August 10th, the call contracts were worth $7.95 or $795 per contract for a gain of $3,350 or 536% STRATEGY FINDS EQUITIES READY TO MOVE Stocks with Consistent Big Move Over-Bought or Over-sold (meaning they have a way to go to recover to previous levels.) Have Put in Bottom or Top and are Reversing and Beginning New Trend Confirmed Entry Signal Cuts out many false starts, shake-outs and trades hitting stops. Metastock Simplified the Chart and Provides a Scan 9

10 More Intricate Version of Chart- Your Choice 10