About Option Trading – How To Trade Options Video 43 part 1


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Hey, guys. This is just a quick video to show you how I actually do some day trading. I’m taking a look at the DXD, which is actually the Ultrashort Dow30 Proshares product. What it does, is it acts in the opposite direction of the Dow. The Dow is currently down 287 points. What I intend to do, and what I would like to do, is hit the extremes.

In other words, I like to see a bar like this, and buy right at the bottom of where that bar came down to. On this bar, the low of that bar was $68.57. What I’m hoping to do is go in with a market order, when that trades down to $68.57. If I can get it, I can get it at the extreme of the bar.

That gives me a very low-risk proposition. If it goes below that, even by one penny, I’m out. What I would like to do is hold on and see if in fact it does trade down to that $68.57 level. If it does, I’m trading with the trend, but I’m also getting the price of the stock at a very low price.

You always want to buy low, sell high. These are 5-minute bars I’m looking at. What I want to do is, as soon as that bar touches the $68.57 level, I’m going to send in my order. I have my order confirmation dialog all set to go. All I have to do is send in the “Send” order. I will send this in.

The market is in a pretty dramatic downtrend today. We’re down 280 points. The advancers and decliners – the market advancers are horrible. The decliners are 2717. The advancers are only 74 issues today. Very poor.

This may not come back down to my price. I’m not sure here. Before we change, I’d like to see it hit that low. I’m also looking at some other market internals. I may just go ahead and purchase this. If it closes at the middle 50% of the bar, that’s my other entry point. If it closes at the middle 50% of this bar, like it looks like it’s about to do, I will go ahead and enter an order.

I’m looking at my market internals, just to make sure there’s confirmation here. I’ll show you exactly what I’m looking at. I’m looking at these internals right here. This is the difference between the volume on the advancing issues, and the volume on the declining issues. They’re really at extreme levels.

I’m waiting for this to come back down, just a little bit. I want to get the very best price I can possibly get. There it goes. The market internals look like they are creeping up a little bit. Everything still looks like it is a positive. I may not get it exactly at the price I want, but I’m going to go ahead and take a chance here, and fill the order.

It did close above here. Immediately, it started trading higher. All I have to do now is go in and place my order, and get that ready to sell. If it doesn’t keep trading higher, my stop loss is at the bottom of this bar, which was $68.57. I don’t think I’m going to let it go that long, though. I’m going to keep an eye on the market.

I got filled at $68.96. I just want to keep an eye on the price. I’m hoping they make it back up to the $69.50 level. I’ll make a nice $250 profit, if it makes it back up there, based on 500 shares.

I’ll pause the video here. Hopefully, the market will make it to my target. I will come back as soon as it does.

The market’s not really doing anything here. It’s just traded sideways for a little bit. It’s started to pop up a little bit now. I’m taking a look at my market internals, just to make sure that I’m on track. If it trades down a little bit, I’m out. I’m going to hit the “Sell” button. If it starts trading up again, fine. I’ll hold on to it.

Market internals are working in my favor. One thing I look at, of course, is whether the market is going to turn. If it does turn, where does it go? I’ll keep an eye on the Dow. The Dow is ticking at right around the -300 level. It’s going a little bit lower, now. 209, 201. That should give me a pop. If it’s not strong enough, though, I’m afraid that we’re going to have to get out of this trade, for a slight breakeven.

The market internals still look fairly positive for this trade, which means they’re extremely weak. I don’t think this is going anywhere, so I’m getting out. That happens sometimes.

All we have to do is reset, and look for the next opportunity. Sometimes I go long. Sometimes I go short. If I want to go long, I look at the DDM. The DDM is looking strong, here. I may go ahead and take a position on there. It will only cost me $5 in commissions, on 500 shares.

I like to take extremes of these moves, but we’ll see. This could be just a little bit of a rally inside of a bear market. It may not be a true turning point here, so we may have to keep an eye on it. Those are the things I look at.

I’m going to bring up my DXD, which is the Pro-Shares short. I always like to keep these loaded. It’s starting to pop up a little bit, here. If necessary, we can re-enter. I think we will re-enter. The market internals looked favorable for a re-entry. Let’s see if that holds true, here. We should get a pop here, any second.

We’ll keep this active, in case I need to get out quickly. I’m looking for a little pop up to $69.50, and I might just get it. I’ll just have to be patient. All of a sudden, things do not look good on the internal scope. When the internals do not look good, the market will turn and go higher. In this case, lower. My stock will go higher, because it’s the Pro-Shares Ultrashort.

We like to keep our eyes on the internals, and make sure they’re working in our favor. Volume continues to be a real problem in this market. Things are just getting sold like crazy. The market is just absolutely insane. Everything is getting sold.

Now we’re getting our pop higher. We probably should have bought 1000 shares instead of 500, but oh well.

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