How To Trade Weekly Options

Our 2011 Market Outlook – www.bigtrends.com/2011

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Weekly Options Explained

Price Headley, CFA, CMTFounder, BigTrends.com


Why Weekly Options?

Trader’s Market

If you are not going to hold a trade longer than a week, why pay for more time than you need?

Weekly options start on a Thursday and expire the following Friday.

The Key: Which Option Do You Buy?

Goal: Stock Substitute

Goal: Small Cash Outlay

Goal: Maximum Leverage

Maximum Bang for Your Buck


What You Will Learn Today

•Learn New Indicators to Guide Your Active Trading

See specific examples of Multiple Time Frame Analysis

Never ask “What should I do now?” EVER again!

A Three Part Method


Weekly Options Have Expanded

Speed and Growth

For fast trades, WEEKLY Options are ideal Buy Deep In the Money options (80%+ Delta) Common Stocks with Weekly Options:

Apple (AAPL), Amazon (AMZN), Bank of America (BAC), British Petroleum (BP), Las Vegas Sands (LVS), Google (GOOG), Goldman Sachs (GS), NetFlix (NFLX), Research In Motion (RIMM)

RISK ALERT: You can still lose 100% of your investment, so we MUST use Price Stops


Williams %R

%R is similar to Stochastics in measuring overbought & oversold levels The traditional scale is from 0 down to -100

While most use a 10 or 14 bar setting, I use a 30-bar setting It is smoother but still responsive

MY GOAL: To find the Strongest Trends (Up or Down)

Avoid the noise within a trading range

Focus on top (or bottom) 20 percentiles

Avoiding the middle 60 percentiles (20 to 80)


Percent R

BULL TREND: Look for “overbought” reading above -20 Followed by a close above that bar’s high, within the next 5 bars

Confirmation

BEAR TREND: Look for “over-sold” reading below -80 Followed by a close below that bar’s low, within the next 5 bars





Why You MUST have a clear SYSTEM!

More money is lost “trading from the gut” than anywhere else.

Systems require DISCIPLINE How much better can you do with a precise method?

It’s EASY to execute a system; not having one creates stress and trouble

Complexity can cause your Mind to FREEZE (ever done that in a trade?)

A Great System is the Answer







www.bigtrends.com/2011