About Options Trading Strategies

Posts Tagged ‘chuck hughes’

Many global commodity, energy and equities markets have recently experienced 50%+ price moves. After periods of extreme volatility the market volatility usually declines sharply as price moves revert to the long term mean or average. For example, the S&P 500 Index experienced a 50% decline during the severe 2000 2003 bear market. The S&P 500 Index bottomed out on March 11th 2003 and finished 2003 with a positive 26.3% return. Volatility decreased sharply after 2003 as the S&P 500 Index price moves reverted to the historical mean. In 2004 the S&P 500 Index advanced 9.0% and in 2005 the index advanced 3.0%. We are following a similar pattern in 2009. After a 56% price decline, the S&P 500 Index bottomed on March 9th 2009 and advanced 23.4% in 2009. If the S&P 500 Index follows a similar price pattern to the 2003 – 2005 period, the volatility should decrease in 2010 and 2011 with below average price moves as the index reverts to the mean. 50% Return on Blue Chip Stocks in a Flat Market If we do experience smaller price moves and volatility in 2010 and 2011, one of the best strategies to implement during flat markets are option spreads on blue chip stocks. I have been initiating option spreads on blue chip companies like Coca-Cola, Colgate Palmolive, Johnson & Johnson, 3M, Procter & Gamble, Pepsico, Abbott Labs and Helwlett Packard. Learn how these spreads will produce more than a 50% return on average if these stocks remain flat over the next year. These are great returns …

When trading options I utilize my three trend following systems to identify buy and sell signals. I also use trend confirmation indicators such as On Balance Volume to confirm the price trend. Historical and actual profit results demonstrate that this combination of strategies produces a powerful investing force that identifies trades with the greatest profit potential. My Option Cycle Strategy when used in conjunction with trend following takes option trading to a new level by increasing …

When trading options I utilize my three trend following systems to identify buy and sell signals. I also use trend confirmation indicators such as On Balance Volume to confirm the price trend. Historical and actual profit results demonstrate that this combination of strategies produces a powerful investing force that identifies trades with the greatest profit potential. My Option Cycle Strategy when used in conjunction with trend following takes option trading to a new level by increasing …

When I trade stocks or options I like to use money management rules to limit my downside risk. When I purchase a stock or option, I like to limit my losses on a losing trade before they develop into large losses. For example, I will normally sell a stock if it drops 7 to 10% below my entry price. Limiting losses is an essential part of every successful trading program. The problem in todays volatile markets is that a stock can easily decline 10 to 15% in one day. This type of volatility can …