Wednesday, January 11, 2017

ETF Day Trade: Weekly Options Trade using CUE Fine Tune

From the desk of Sagar Nandi and Superior Profit

​For Day Trading, Superior Profit Traders enter trade precisely at the right time using CUE Fine Tune Real Time chart. And they book profit with discipline. Sometimes, if the trade has not entirely played out, they may carry the trade forward to next day. All along, executing the trade following a pre-thought-out plan.

The two trades I took on DIA (ETF) in USA Market using Weekly Options on 3rd and 4th January 2017 are good examples of this Superior Profit Way of Trading Profitably. I will share the detail of these two trades below.

To begin with, I like to keep an eye on the Broad Market indices, futures or ETFs of the country I am trading. For USA Market, these are the three ETFs SPY, QQQ, and DIA.

​I had noticed earlier during off-Market hours that DIA was near Memory line in CUE Daily Hop On chart. I anticipated that the Memory might act as resistance and DIA might move sideways for a while or come down from the resistance; just long enough to make a Day Trade profitable.

​Here is the CUE Hop On chart of DIA at that time.

As you may also notice, DIA had displayed a Bearish Headwind signal on the Daily chart a few days ago. That further supported my short term Bearish view on DIA for a Day Trade.

Next, I looked at CUE Fine Tune 5 Minute charts of DIA, QQQ, and SPY.

​I noticed that DIA was the weakest. I observed this weakness by looking at the price movements of the three ETFs around the Fine Tune Pivot Levels.

CUE Fine Tune chart draws the Early Range Pivot Levels soon after Market Open. By looking at the Stock's move within or out of Early Range, we can see if it is Short Term Bullish or Bearish or Neutral.

If the Stock (or ETF) moves out of Early Range High, then the Stock is Bullish in the short term. And if it goes below Early Range Low, the Stock is Bearish in the short term. If the Stock moves within Early Range, then it is Neutral in the short term.

As seen from the Fine Tune charts below, DIA was not able to go above Early Range High. However, both QQQ and SPY went well above Early Range High in their respective charts. 

​​In Day Trading, if I am looking for Shorting a Stock or ETF, I tend to Short the weakest among related symbols. This principle (and the Memory Resistance in DIA Daily chart) lead me to take a Bearish Day Trade on DIA using Weekly Short Call Vertical. I used "Short" Vertical to have time decay in my favor. Below is the Risk Profile of this trade.

I tend to place Good Till Cancelled (GTC) profit booking order on a partial position as soon as my Trade Entry is filled. In this case, I did the same. And within 1 hour; as highlighted in the chart above; half position was closed with 50% profit.

At the end of the day on 3rd Jan, just before Market Close,  I looked up DIA in CUE Spotlight - which combines the Daily Hop On view and Intraday 5 Min Real Time Fine Tune view of the instrument.

This snapshot is shown below. I noticed that the Daily Candle was ending the day with a Bullish shape; with Long Lower Tail. And in the Fine Tune, 5 Min chart on the right, DIA had recovered significantly from Day's Low. As I initiated the trade as a Day Trade, and the day was ending with Bullish tone, I decided to close the remaining position at 25% profit. This trade resulted in a net profit of 37% on the full position within one day.

​The trade was taken as Short Call Vertical using Weekly Options (DIA 6 Jan 2017, 199/200 Short Call Vertical). Below are the actual orders executed for this trade. 

I closed the 3rd Jan DIA trade with profit. After closing this trade, I noticed that DIA was still below the Daily Memory Resistance. So, next day, on 4th January, I kept an eye on DIA. Looking for another opportunity to take a Bearish trade - provided the CUE charts signaled one.

As it turned out, again, DIA was the only one among DIA, QQQ, SPY that failed to go above Early Range High in the morning session after Market Open. And I took the same Short Call Vertical spread that I used the day before; using Weekly Options.  

Here is the Risk Profile of this second trade.

As usual, I put my GTC profit booking order on half position at 50% profit level. However, this was not triggered. At the end of the day on 4th Jan, I looked up DIA in Fine Tune 5 Min chart. DIA did not go down. Neither could it go up. It Closed right inside Early Range. As the Daily Chart Memory Resistance was not violated, I decided to carry the trade overnight. Below is the CUE Fine Tune view of DIA at the end of the day on 4th Jan.

Carrying the trade forward turned out to be the right decision. Next day, DIA fell, and the GTC profit-taking order on half position was executed around 11 AM on 5th Jan.

I then put another quarter position profit-taking GTC order at 75% level. And before midday on 5th Jan, that was also triggered. I was then left with a quarter of the original position. And I decided to try to let it expire worthless. Knowing that from this point onward, the trade was a guaranteed Risk-Free-Trade. Even if DIA rallied, due to the loss-limiting feature of Vertical Spread, the overall trade was going to make a profit.

Here are the DIA Vertical Spread orders executed on this trade till this point.​

Next day; on 6th Jan; which was the expiry day of the Vertical Spread, DIA did not come down. Instead, it went up and Closed at 199.51. Right in the middle of the two legs of the Vertical. The DIA Long 200 Call expired worthless. And the DIA Short 199 Call was worth 0.51. I had opened the Vertical Spared for 0.41 credit. So there was a small loss in this remaining position.

Overall, still, the trade made 44% profit in 3 trading days. I was able to capture a profit as I booked profit in a disciplined manner at 50% and 75% levels without hoping for a much larger profit on the whole trade.

The CUE Fine Tune 5 Min chart below explains the full trade Entry and Exits.

As these two DIA Day Trades show, a disciplined trader can use the CUE Charts to make a significant profit using Weekly Options. Superior Profit Traders do that regularly. And sometimes they share their trades while they are taking it.

Both of these trades were posted in Superior Profit Traders Community while they were entered. Not as a Trade Alert to fellow traders. But as a way of demonstrating how the CUE Charts may be used to take disciplined and profitable trades. The trades are posted before knowing their outcome. And sometimes; if required; our traders accept a small loss and move on to next trade. That detail is also shared in the Community posts.

You may find the 3rd January 2017 trade in Traders Community following this link and the 4th January 2017 trade following this link.

There are many similar Day Trade ideas as well as Long-Term Investment, and Swing Trade ideas in the Superior ProfitTraders Community.

I hope as you go through these trades, it will give you some insight on how Superior Profit Traders are taking profitable trades every day in different countries around the world.

Sagar
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