Example Set-Up

 

The options trading system used by this firm is looking for a specific type of market condition; the “spring to up-thrust”.

 

We’ll give credit where it’s due; our idea of looking for this type of set-up came from my former mentor, David Weis.

 

Years ago, in one of his daily updates he commented on how the market tends to form a spring and then go straight into an up-thrust.

 

It does not happen every time of course.  However, an up-thrust properly identified, provides the swiftest down move (potential) available in the markets except for an outright crash.

 

Price action can form this set-up on a print or close basis.  However, from empirical data, the close basis yields the best opportunity.

  

The chart inserted is a good example of the spring to up-thrust set-up.  TGT lost seven months of gain in just ten trading days.


 

 Trading Method (Options)

 

Our market approach follows WyckoffLivermore;

 

Identify a set-up that has probability for a move lasting several days or weeks and potential for a significant gain.

 

Significant gain is anything over 1,000% 

 

That might seem extreme but when trading options (correctly) a 10-bagger gain can be made in a few hours; such as what happens on the day of expiration.

 

While those opportunities do occur, they are infrequent and one has to be seriously on their game to interpret price action in real time.

 

One 10-bagger trade example, lasting a few (market) hours was this one.

 

Other opportunities that have longer time frames provide for a more sustainable (and more reliable) move.  A good example is here.

 

Results presented on this site prove that with enough experience and focus, markets can be timed and timed effectively.  Not only that, the method is modeled after techniques and insight developed by market masters during the early 1900’s.

 

Back then, as we're doing now, there are no indicators, no algorithms, no artificial intelligence;  just real-time tape reading and discerning what the market is saying about itself.


 

Options Strategy

 

 

Successfully trading options requires advanced skill in three areas:

  • Vehicle
  • Direction
  • Time.

Our strategy is simple but not easy:

  

Trade high probability market set-ups using near expiration put (or call) options.

 

 At this point in time (post financial crisis 2008 - 2009) and in our view, this trading method is far superior to a fundamentals based or 'diversified' approach.

 

If one is 'diversified', then one has to admit they are unable to discern the technical, manipulative forces behind market moves. 

 

The above statement is harsh but true and taken as a paraphrase from Gerald M. Loeb in his book, The Battle For Investment Survival.

 

As Wyckoff stated over a century ago, the market has its own energy and objective(s).  Price action has little to do with fundamentals.

 

Wall St. has deluded the public into thinking fundamentals matter; in so doing it has been able to promulgate the deception for over 150 years.

 

Livermore stated as much during an interview with Wyckoff in 1921.  He specifically used that word to describe Wall St.:  "Deception".

 

If one is asking the wrong question (fundamentals), then one is going to get the wrong answer and be at least two levels (wrong question, wrong answer) removed from market reality. 

 

Some are so deep in the fallacy, they spend a lifetime trying to figure out what the market 'should' be doing.

 

Entire industries such as financial planning, money management, radio and television market reporting, have been (either knowingly or unknowingly) built on and in support of the Wall St. deception.

 

Of course, the trading professionals are running their own game. 

 

They use market earnings or news releases as an 'excuse' to drive prices to specific levels where they can enter or exit at low risk.  Don't think that's true?  Take a look at this.

 

At this stage (late in a fomented bull market), there is significant downside risk and very little upside commitment.

 

A market event of some type may be approaching from an unexpected source.

 

The options method detailed on this site takes into account (and intends to profit from) the possibility of another market breakdown and "no bid" that can happen at any moment.

 

The open area of this site posts the results of selected option trades and at times, other directional (ETF, futures, or equity) trades as well.