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Next Week Trading Plan (Aug 14th)

 
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arthur
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PostPosted: Sat Aug 14, 2004 9:13 am    Post subject: Next Week Trading Plan (Aug 14th) Reply with quote

Next Week Trading (Aug 14th):

Next week is options expiration week, which is typically a volatile week. Max Pain expiration works about half the time (the market tends to do what most people don't expect, and Max Pain is the greatest number of options expiring worthless). Currently, SPX Aug Max Pain is 1,100 with far more calls than puts, which is bearish (i.e. a contrarian indicator). OEX (S&P 100) Aug Max Pain is 530, with a huge value of calls over puts (very bearish). QQQ Aug Max Pain is 34 with slightly more calls than puts. DIA Aug Max Pain is 101 with slightly more puts than calls (which is bullish). These indicators suggest QQQ true Aug Max Pain is 33. So, the market may rally somewhat next week. I plan to buy SMH Sep 30 calls on a small pull-back Mon (if SMH rises one point to 30 next week, my 1,400 calls will rise by at least $70,000).

My portfolio is over $880,000 including about $665,000 in cash.

Calls Contracts

SMH Nov 32.5 2004 400
SMH Jan 30 2005 300
SMH Jan 32.5 2005 400
SMH Jan 35 2005 300

Puts Contracts

DIA Oct 98 100

Portfolio at $500,000 on Jul 1st, 2003
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