Tuesday, August 24, 2010

Trade: Short GOOG...Winner!

Update...Sold for a cool $1,000 at $24.50...my target for this option was the lower bollinger on the daily chart (I figure this was a decent level of resistance). This level resided at around $255 level in GOOG.

The hourly chart however, says to hold on...but I hit my target and am happy with the results.

I noticed that one thing that Headley and company focus on is liquid stocks with liquid options. They are now moving on the weekly options. This drastically reduces their universe of stocks and, I think it also increases their odds of success with every trade. Its easier to get out at the price you want if price discovery isn't a problem for the instrument...this has been a problem for me...but looking at shorter time frames you get many more opportunities....so its OK to have a limited universe because there are more bars showing opportunities.

Over the weekend, I viewed two videos that came with my options sniper subscription, which are basically coaching videos (without the sales pitch). In the videos Headley discusses the use of CCI as a primary indicator in these volatile markets, particularly its use when it comes to the hourly chart aggregation period.

Anyway the process is the same as with %R, you get a retest and that bar's high is a stop...etc you know the drill.

Looking through the small universe of stocks that have weekly options, I noticed GOOG had set up nicely last week for a fast move down, and today (right now at the 2PM hour)...we have a retest forming on CCI (and a few other indicators) ADX is still green and strong and %R is also retesting.

Anyway its a pretty good actionable trade if you ask me. Now Headley doesn't like these higher priced stocks because it reduces the # of options you have and also the bid/ask spreads are wider...so he probably wont send an alert about this one...but I am putting what I have learned to practice here.

I pulled the trigger on one GOOG Aug 27 $480 put for $14.50 taxable account only.


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