When we use “support, resistance, pivot and Fibonnaci,” effectively we are telling you what prices should be. That is, if a price does this, then it should go there or it should stop going in that direction when it reaches X.
Much of Floydian math, as our long term subscribers call it, is an intuitive way of reading the market, and reading channels, which represent a flow of prices and the boundaries within which prices are likely to operate. Moving averages help us see channels, and effectively used, help the support and resistance trader identify the highs and lows better.
Remember, many of our traders use tight scalping techniques with profit goals of .50 to 1.00 a contract, and “fall in love” with an option, learning it’s own channels and range, and where traders seem to lead it bid/ask.
Other traders with OEX do this also, AND trade longer term moves for larger gains, often selling in Floydian Thirds, which is 1/3 at one price, 1/3 at another (both higher than the buy, we hope), and the final 1/3 waiting for the “top of the channel” or the higher/lower Dow projection.
Channel longer term trading can be higher risk, with a much greater reward ratio.
Yesterday’s moves allowed up to 60% returns on the April640P, with top sells to our top recommendations, and for some, even higher to 18.50.
Many traders wrote yesterday asking “time for calls” as the day progressed, and we responded with “not yet”.
The market yesterday hit a theoretical Dow bottom of 12,428, and we had provided ranges of 12,460-112,385.
The next moves have potential for two way trades. However, we will NOT offer an opening signal…..watching bias and commitment/volume first.
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