Recently I read a very interesting article about ways to trade the COT report (SFO Magazine, Nov issue page 64). Anybody else uses COT report in their trading? If yes, did it help enhance your trading results
I look at it every week. It's like all the other millon bits of info. You take it for what it's worth. That being said, it is a credible report and I refer to it for my longer term trading and investing.
I thought the same thing till I read this article. I glanced at the COT numbers before but I didn't know what to make of them ... Here is one paragraph that may have some value: "If a trader bought the S&P500 index when commercial traders hit an extreme net position (two or more standard deviations from it's 27 week moving average), the return over the next week would be 0.6 percent and 6.6 percent over 10 weeks. This beats the average S&P 500 return of 0.2 percent for one week and 1.7 percent for 10 weeks." Selling closer to the money options when commercials hit extreme positions may not be such a bad idea.