Price Patterns

Here is the weekly list from this mornings price patterns class. Last weeks list did very well...(thanks to the market) here are a few patterns that were discussed this morning. Bon appetit'!

NBL- Bull Flag
HYDL- Bull Flag
RATE- Bull Flag

CME- Falling Wedge
COGO- Symmetrical Triangle
ASN- Ascending Triangle

Any takers on LUFK? Could this be a 23 pt sym trian? One neg is industry trend.

Brian K

Brian, not sure I like the 7-8 month time frame on LUFK. Looks like a smaller one over the past 3 months that shows a 12 point opportunity that might be better with options if it manages to breakout.


If you want a huge move, check out CTRP's flag break today.

What option do you like on this. i was thinking the Jan 55's because the spread on the 60's is HUGE.

Brian K

Yes, I know. Silly me for taking it! LOL!

Can someone please beat that Vanilla Ice song out of my head for me??? ICE has me losing my mind.


Nice call on CTRP, I took jan 60's(I only saw a .15 spread,seems good to me).



I am in LUFK right now. I bought the March 07 calls when LUFK was at 58.57 yesterday morning. I think it has already broken out from the symmetrical triangle that started in Sept and I am looking for it to hit 67.5-70 if it can overcome resistance at 62.5-65. I was not planning to keep it for 23 points but if it still looks strong in Feb then I can always trade in the March calls for June or so and let winners run.

Allen Smolenski

I'm really having a hard time finding the "falling wedge" on CME. Can anyone enlighten me here?

Brett ~ I'm curious about CTRP, but the volume is really not there?

Hey Allen,
What rules do you use for your long options? I see the delta's on LUFK for March 65 and 70's to be marginal and the pricing to be a full point over the T-Val's.

Brian K


I hope you haven't checked my deltas!!! Or lack thereof!!!

Hi Toni,

I disagree. It was the highest volume in 2 weeks and pretty strong, in my opinion.

Ok, point taken. Do use any Greeks or over/under info. If so which one do you like to check?

Brett~You're right about the 2 wk volume. Being a newbie, I thought "strong volume" should always be higher then average volume.


I actually have the Mar $60's. If you see the huge symmetrical triangle since July, that has roughly the same target as this flag break, so I want to give it enough time to complete itself.

Jeff, with only crude inventories tomorrow, do you expect a continuation of this updraft?

Oops, I meant Sarah.

Here's a couple more to look at.

DDS bull flag (flag is a bit extended)

SNDA (bull flag breakout)



I only trade in the money options -other than that I don't have very strict rules. In general I prefer an open interest of 50 or more, a delta of 0.7 and I like to limit overvaluations to 20%. That being said I don't mind stretching these "rules" given our current bull market. For LUFK I have the 55 calls with delta 0.774 and an overvalued t value of 13%. For this call I am up 10% in two days.


Toni- If you want to see that falling wedge that confirmed today on CME, send me an e-mail and I will forward it to you.

Brian- I do not use any greeks to evaluate options...especially not the t-val or over-under. (that might have sparked an idea for a post!)

If you have followed this blog for awhile I am an OTM options trader for the most part.

Brett- If I had to guess the market direction...inventories wind up lower than expected, oil prices rise, market opens slightly down? At least that's what the magic 8-ball says.

I hope I kept the receipt just in case.

Re-entered MLM yesterday after moderate gains last week and being stopped out on Friday. I am extremely happy so far with it's move. I have good Trailing Stops in place as well. I also re-entered IBM, FDX and GMRX this week with similar results. Because of last weeks whipsaws I am really managing the stops with great care based on Price Action (ATR as a guideline). Great week so far for sure!!!



For a future post how about sharing your thoughts on risk management. As time goes by I find myself trading more options and fewer stocks but I have been avoiding OTM options mostly b/c that's what I've been taught to do. I'd be interested to see what you and the other bloggers think. Allen

Stock Watchlist to share.....
AZO - cup and handle
WY - symmetrical triangle breakout
YUM - ascending triangle
UNP - potential flag pattern


Does anyone else see a bull flag pattern with AAPL? If it breaks out above 92.5 or so it could move another 12 points in a month. Allen

looks like a bull flag with resistance at 93 - beware of negative article this AM on reliability of iPod

Also, beware of running DEERE today. DE looks ready to bust this flag.

Anyone else in AMAG? What a move.


Thanks for the suggestion. In the archives I have written several posts about OTM options and risk reward. If you have trouble finding them, e-mail me.



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About me

  • I'm Option Addict
  • From Saratoga Springs, Utah, United States
  • I am a professional trader and an instructor for Investools. I've had relations with the markets for 9 years. Born in Concord, CA, but reside in Saratoga Springs, Utah. Father of THREE, Husband of one.
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