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.