About Options Trading – Trading Options Video 26 part 10


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Here’s another day in which over 150 million shares were traded, on one day. In order to get that kind of volume in a stock’s trading, in a single day, you’re talking about a significant amount of money. Think about it. 150 million shares. At this time, the stock was around $19 or $20. Just do the multiplication. $19 multiplied by 150 million shares. That is a lot of money that went into that stock on that particular day.

When you see prices start to drop, on lower volume, and you have higher volume on these up-days, in which you have a black volume bar here, and an up-day for the day – it shows a certain amount of support for the stock.

I’m sorry, these are weekly bars. That is the amount of money going into the stock on a weekly basis. Let’s take a look at a daily chart here. You can see a significant amount of volume coming into the stock, but it did not fall in price. You want to take a look at these black bars. There are a few significant ones here.

There are red bars, but for the most part, here is a significant black bar. There are a couple of small bars here. There is a big bar, compared to the days previous to it. Here are some more big bars. There are three in a row with increasing volume. Here is another big black bar here, and here. This is more significant and higher in volume than a lot of the red bars before it.

There is another one here. When we had a more recent sell-off, from 18.50 back down to 17.75, you can see that the volume had decreased significantly. Usually, that means that there are not too many sellers in the market, here at these price levels.

Potentially, we could have much higher prices on the stock, just based on that volume analysis. This stock has been in a down-trend now, for some time, and I have tracked this channel. This is a little sideways channel that I had in there for a while. If you follow this down-trend channel for a while, you can see that it still hasn’t made much progress in moving up. It could move up higher, or it consolidate here, before moving up higher.

There appears to be some support of the stock, through these higher volume on the up-days in the stock, as it continues to move in a sideways pattern. It’s something that you might want to keep an eye on. I’m not recommending that you buy Starbucks stock, but it is something that is significant to keep an eye on – this idea of determining both price and volume, to determine when to take action on a stock, in a way that I talk about on Module 11.

That is it for technical analysis. You want to keep an eye on the general economy, to see what particular types of stocks are going to be the next hot sector. Right now, institutional investors are getting out of oil stocks. What are they going to get into next? We don’t know.

That is exactly the reason why you have ups and downs in the market. Institutional investors, big money managers, are selling stocks that they no longer want in their portfolio. Then they start buying other stocks. They start buying other sectors. In order for us to be successful in the market, we have to understand why these fluctuations take place.

It’s not because somebody just decided to wake up one day and sell stocks. It’s because mutual funds are in there, selling the stocks that they don’t want in their portfolio anymore, and then buying stocks they do want in their portfolio. When that happens, we get the cyclical nature of the stocks, going up and down, based on the buying and selling activities of large mutual funds.

That’s it for this section on technical analysis. We have covered long-term trends, cycles and sectors, channels, and resistance and support points. In the next section on technical analysis, in the big picture, we’re going to talk about intra-day charts. We’re also going to talk a little bit more about volume decline and price action.

We’re going to talk about candlesticks, and then I’m going to talk to you about how to put it all together in a trading plan, so that you understand when you should be putting on your positions, and how you should be putting your positions on.

As far as Delta, either plus or neutral Delta, or neutral on our positions… If you’re in a position where you are hitting a resistance point like this, you may want to be Delta negative on this. If you’re in the middle of the trading range, and this is the time that you should be putting on your positions, you’re best off being Delta neutral. If you’re down in these levels, and you believe that there is going to be a significant bounce in the market, back to the upside, then you might want to be Delta positive, at least slightly.

This becomes a little bit more intricate than simply buying and selling positions. Instead of simply putting on positions that we have talked about, such as calendars, iron condors, double calendars, and so forth, if you have a little bit of technical analysis knowledge, you can begin to put the odds dramatically in your favor.

I’m not saying that it’s absolutely necessary. The techniques that we talked about, as far as double calendars and iron condors, and building your portfolio, will not change. The only difference is, you may want to keep an eye on support and resistance points, just to give you that little bit of an extra edge.

All right. That’s it for today, guys. We’re going to be talking about some really interesting things in the next technical analysis video. Stay tuned, and trade with confidence.

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