March 29, 2017
Inside Trading
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Dan Keen

Dan Keen is the publisher of a county newspaper in New Jersey and has been trading online for years. Since the 1970’s he has written hundreds of articles for national computer magazines, as well as several books on computer programming for TAB Books. He taught computer science at Stockton State College in New Jersey. Mr. Keen has written over a dozen books on science topics for both Sterling Publishing and McGraw-Hill Publishers and has taught workshops in online trading.


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This week Inside Trading brings us Dan Keen. Dan is an expert in covered call writing who outlines some basic options price tables and terminology.

Next, we hear from Lee Gettess as the over twenty-year trader tells us what he expects from the stock and bond markets for the coming week.

Then, Adam Oliensis explains how to measure the flow of money in or out of a security.

Last, Andy Chambers presents his Weekly Market Line in the Sand Newsletter.

Enjoy!

Adrienne LaVigne
TradeWins Publishing



 

Options: Price Tables & Terminology

by Dan Keen

The following is an excerpt from Dan Keen's Covered Call Writing: A Low Risk Cash Flow Money

The table below is called an option “class” listing; it is a group of calls or puts on the same stock. Each horizontal row is an option “series”, showing the prices for calls or puts for a particular option having the same strike price and expiration date. This listing is for our hypothetical XYZ Company. The group on the left is information on call options; put options are on the right.

Let’s examine the first row, Dec 10 (XYZ LB-E). The month and the strike price are indicated by “Dec 10”. Don’t be confused thinking “10” is a date – it is the strike price. The day of the month is not given, as it is always the third Friday of the month.

Next, the symbol “XYZ-LB-E” specifies the underlying stock, in this case the XYZ company, “L” is the month (December), and “B” is the strike price ($10). You can find the “L” symbol and the corresponding strike price “B” listed below in the following two tables.

The first three letters of the option symbol will not necessarily be the same as the ticker symbol for the underlying stock. Obviously, some stocks have more than three letters in their ticker symbol, such as those found on the NASDAQ exchange. Sometimes the letter “Q” is also used as an ending character when shortening symbols. For example, the ticker symbol for Staples is SPLS. The June $22.50 call option symbol is PLQFX.

The final letter “E” is not actually a part of the option symbol, but indicates the options exchange where that particular option is traded, such as the New York Stock Exchange, The American Stock Exchange, The Philadelphia Stock Exchange, and so on.

Other columns in a typical option class listing, as seen in the first table above, show the price of the last sale, the bid and ask prices, the volume, and the open interest (the number of option contracts currently held on that specific option).

Options: Price Tables & Terminology

 
 

Lee Gettess' Market Sense

by Lee Gettess

Lee Gettess is a top trader who is excited to bring you his video newsletter. Each week, Lee will share his predictions on what he anticipates from the bond and S&P markets.


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Money Flow Index

by Adam Oliensis

The following is an excerpt from Adam Oliensis' Stock Chart Analysis & Dynamic Trading System

Money Flow indicators measure the flow of money into or out of a security, based on both volume and rising or falling prices. The particular version of Money Flow we will talk about here is normalized in a way that’s similar to how the Relative Strength Index (RSI) is normalized. Because it measures a specific look-back period (e.g. 14 days), it operates as a kind of volume-weighted momentum oscillator.

In order to make the Money Flow Index (MFI) calculation easier to understand, we have broken it into the following components, shown in the table below.

The “IF, THEN, ELSE” in the equation returns “data 1” if the test is true (non-zero) or “data 2” if the test is false (0). So, for instance, in the phrase, “IF C>=C[-1] THEN 0 ELSE 1” the ordinary English meaning would be, “If today’s close is greater than or equal to yesterday’s Close, then we’ll use “zero”, and otherwise we’ll use “one”. In the calculation of MFI, using this phrase self-selects whether today’s reading is part of NMF or PMF. The self-selection is done by virtue of using the result of the “IF, THEN, ELSE” as a multiplicand in the equation. If the result is “zero”, then the product of the equation is also “zero” and the appropriate NMF or PMF line remains unchanged.

MFI is used in much the same way as is RSI, in that we look for the MFI line to become overbought (oversold), and then we sell (buy) a cross down (up) out of the overbought (oversold) condition.

Looking at the chart below, you can see the MFI line is fairly lumpy. It does a good job of giving us an idea of whether the market is overbought or oversold, but its lumpiness makes it hard to measure precisely when you’re getting a good signal.

Money Flow Index

 
 

Weekly Market Line in the Sand

by Andy Chambers

The following is an excerpt from Andy Chambers' Weekly Market Line in the Sand

Every week Andy publishes his “Weekly Market Line in the Sand” newsletter. The following are trade updates from his most recent issue.

Mini DOW Futures Weekly: The trend is up. The bears have the momentum. The initial hurdle for the bears is seen at 19,607.

QQQ Daily: The trend is up. Tuesday’s big reversal suggests that the momentum is shifting to the bears. We want to exit the QQQ call.

On 9/18 we suggested buying the QQQ January 19th 2018 120 call. The buy price was 8.92. We want to exit the call at the market. The current bid/ask is 14.22/14.82.

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PLEASE READ. Past results are not necessarily indicative of future results. There is a substantial risk of loss trading commodities, stocks, bonds and options with or without this or any other advertised product, service or system. Also hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Since the trades have not actually been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown.