Notes

Forex News For 7 April 2011
Sometimes traders feel the urge to ignore a buy/sell signal, or even to exit a trade because it's not profitable at the moment. Only those traders who are committed will be able to stick to a time-strategy that is not emotionally driven.

Fearful bulls decided to only buy at the lowest price. The Bears continue to sell at lower rates as long they feel like winners. It ends when the bears feel more cautious and resist selling at lower prices.

Volume. A solid uptrend, or downtrend, should be paired with increasing volumes. Beware if the price is going higher but the volume is low. This could be an indication that the market has lost its energy to support its upward trend.

What are the options once the trade has been completed? SPY can move up strongly and within a week I could close the trade for $.10 debit locking in $.40 gain and an ROI of 26%. However, SPY could also go sideways for the next month or even pull back a few dollars. My trade still makes money in any of these situations. Why is this so? Because I have sold an option that is 100% time premium without intrinsic value. In such cases, I find that time is my friend. While it's true I also own a long put option that is also wasting away, it's value was initially less so if both expire worthless, I end up with a net credit.

I trade both bearish and bullish short verticals. I will only discuss the bullish trade in this discussion. The bearish will be left as an exercise for you.

bitcoin click here ? When your trend lines look a lot more like a triangle, a wedge pattern is formed.You will notice that the trend lines you draw are angled at an angle.This angle usually points up or downward.If you look outside this pattern, you'll notice a trend. It can be either up, or down.An upward line would be a bullish trend indicating a good time to buy.A downward line indicates a bearish trend and a good opportunity to sell.

Before we get into the discussion about the strategies, let's take a look at option spreads. Spreads are basically buying one option and selling another against it. This can be advantageous as it creates a defined risk but also gives up the unlimited potential profit of simply buying the option. Vertical spreads are where you buy one option strike for a specific underlying, and then sell another option in that month. Calendar spreads can be used to buy an option strike within a month for a particular underlying and then sell another option with the same strike price, same underlying, but in a different calendar month.
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