DOW bull flag - on to 9500?

[chasinfla]

looks like all eyes are on 9500-ish. I expect Miss Market to be coy.

Nat, I have noticed more than one situation where that very approach worked well. It's a good tool to have in the kit.

 

[ctrader]

Originally posted by Girlpower
These swings have been going on for ages, and I've been taking a very simple line with them. If it's gone up a lot, buy a couple of very out of the money puts, write off the premium as a loss and then forget about it. Opposite for if it has gone down a lot. date them beyond the current month and if they come in...

Worst way I lose my premium, most times I've made reasonable profits, and a few times I've made good profits. Spent part of the mid to late 90's doing it with the FTSE too in thse big swings inside the uptrend. Worked then too

If you can think of a better way, for goodness sakes tell me please?

Natalie

Makes sense... What would you do in this case... its gone up a lot, but it could easily go up another 1000 pts. Likewise it easily head to the lows. I wouldn't be surprised in either case.

 

[Girlpower]

Originally posted by ctrader


Makes sense... What would you do in this case... its gone up a lot, but it could easily go up another 1000 pts. Likewise it easily head to the lows. I wouldn't be surprised in either case.

Right now I'm kinda wondering the same - whether to take a profit or stay with my calls. Jury is out right now. I'm seeing a possible move to 9250-9350, after that it's up through resistance which may not happen...

Guess I'll know in a couple of days one way or the other...

Natalie

 

[ctrader]

Originally posted by chasinfla
looks like all eyes are on 9500-ish. I expect Miss Market to be coy.

Reading the boards this morning I see just about a 50-50 split in the good traders opinion... if you look at a long term chart, we are just about in the middle of the bear channel, so it could go either way, but the momentum is definitely up since oct 11th.

What i have been noticing is that longs tend to be tentative with their opinions today, while the bears keep trying to press their shorts believing there is no way it can go up... maybe dow is climbing a wall of worry?

 

[chasinfla]

took the words right out of my hands.

 

[Trader5287]

Originally posted by Girlpower
These swings have been going on for ages, and I've been taking a very simple line with them. If it's gone up a lot, buy a couple of very out of the money puts, write off the premium as a loss and then forget about it. Opposite for if it has gone down a lot. date them beyond the current month and if they come in...

I think its essential with the puts in the age of terrorism. You might like Nassim Taleb's "Fooled By Randomness" if you haven't read it already. About 25$ at Borders or Amazon. You can buy a lot of 50 cent options for a few hundred dollars and a look at the open interest on these deep OOMs shows many others are doing it also.

Geo.

 

[Girlpower]

Originally posted by Trader5287
You might like Nassim Taleb's "Fooled By Randomness" if you haven't read it already. About 25$ at Borders or Amazon. You can buy a lot of 50 cent options for a few hundred dollars and a look at the open interest on these deep OOMs shows many others are doing it also.

Geo.

It was the OI on the deep OOM FTSE options that alerted me to this back in 96. But yes. that's more or less what I've been doing. I did a few calculations as to the most likely to be profitable and came up with a few formulas to apply, which dictate how OOM I get.

As to the book, I've skimmed it but not fully read it. Thanks for reminding me about it...

Natalie