New Strategy For QQQQ in Options...Tested Already

Discussion in 'Options' started by niravchovatia, Nov 6, 2009.

  1. Hi Everybody,

    I am a full time trader and testing different strategies on options.

    I had came across some great combinations as follows :

    We are choosing POWER SHARES EXCHANGE TRADED FUND TRUST - QQQQ as our product to deal in with.

    We require to find the momemtum of this product by calculating momentum factor that is designed by Wilder. We can do that as follows :

    Get the OPEN, HIGH, LOW AND CLOSE prices of QQQQ of today before 10 minutes of market closing today and take a CLOSE price and minus it from CLOSE price day before yesterday. If that figure that is momentum factor of today is less then previous two momentum factor of previous two days then we can assume that QQQQ will be SHORT by tommorow. If today's momentum factor is greater then any of the previous two momentum factor of previous two days then we can assume that QQQQ will be LONG by tommorow.

    As soon as we will get assumptions we will wait for tommorow to open the market. As soon as market is open tommorow, we will work as follows :

    1. IF assumption is LONG :
    Find the delta greater or equal to 70 on CALL side and as soon as we will find delta get that strike price and buy CALL of that strike price. Once you get filled, put a profit target simply by 10 Cents away from the filled price and put a GTC order on that.

    2. IF assumption is SHORT :
    Find the delta greater or equal to 70 on PUT side and as soon as we will find delta get that strike price and buy PUT of that strike price. Once you get filled, put a profit target simply by 10 cents away from the filled price and put a GTC order on that.

    When you do like this and if you had trade on 100 contracts and if you get profit of 10 Cents you will earn USD 1000 within just 60 minutes or so after opening of market.

    Repeat the whole procedure everyday and earn USD 1000 every day on 100 Contract of QQQQ with options.

    I had tested it and it works fine with me. Test it and let me know your opinion.

    Nirav Chovatia
    Dubai
    pelicanfinancials@gmail.com
     
  2. rickf

    rickf

    Ummm ... I could be wrong, but that's almost the exact type of trade that Darlene (forget her name) discusses in a free webinar about trading the qqqqs that I saw a few years ago when I first got into options.

    The .10 profit target for $1000/day is something I know she was using in her webinar....so what you claim to be your idea defintely sounds like "her" system here.

    EDIT: Yes, it is from her course. I won't post the vendor link, but the page says "And the Qs don't require big money to produce profit; a 10-cent move can mean a nice gain. "
     
  3. As always trying to use options to leverage your directional guesses and timing in the market has been historically a losing strategy. This is nothing more that a not very sophisticated market guess on timing and direction, its not an options strategy per se, nor do you address stopping yourself out on the 50% of the time you will be wrong statistically.
     
  4. What do you do if you buy the contracts and and instead of going up 10 cents to your profit target, the price goes down? Do you hold until expiration with the option potentially being worthless or do you stop yourself out at some point? You need to specify a full system that takes you from flat to either long or short and back to flat. This system specifies when to get out of a winning trade but not when to get out of a losing trade.
     
  5. Whether the underlying is the QQQQ or anything else they're all going to need the same move on a .70 delta option to make 10 cents on that option.
     
  6. $1,000 a day isn't enough. Off to mortgage the house and buy all the QQQQ's I can eat (sold the kids already).