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.

Jon

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

Bret,
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.

Brett,

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

Sarah

Brian:

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

Brian,

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.

Jeff,
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.

Toni,

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)

MikeH

Brian:

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.

Allen

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!!!

Regards,

Randy

Jeff:
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

Danuta

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.

Allen,

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.

Thanks!!!

Jeff

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  • 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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