SATS2 With PUT Option Strategy Part 4

The next uptrend line is broken on January 23, 2004 (figure 3.7).

Figure 3.7: PUT buying signal 01/23/2004

 

01/23/2004: stock price $15.32; strike price $15; expiration date July 2004; unit price $1.35; buying 6 contracts for a total cost of 6*$1.35*100= -$810.

We keep a stop at a previous resistance line, because the last top is too far away.

HERE WE MAKE A BIG JUMP TO THE END OF THE EXAMPLE...

Figure 3.34: End of the test period.

We close the position at the end of the test period 11/21/2008.

11/21/2008: stock price $1.82; unit price $4.0;
selling 83 contracts 83*$4*100 = $33,200

Profit/loss = $33,200-$4,980 = $28,220.
Available cash for next transaction = $145,700.

Final profit = $145,700 - $1,000 starting capital - $4,700 cost = $140,000.

Remember also that we never putted more than $5,000 at risk in one trade.

I have tried to demonstrate and hopefully convinced you that with a limited technical analysis knowledge about trendlines and support and resistance lines and the use of options it is possible to boost profits to a much higher level.

Please remember to start using trendlines only after a SATS2 buying signal!

Once more I hope I have shown that there is a lot more profit to be made with some extra effort.

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Applying the basic SATS2 expert, manual interfering and using put options,
 
we have made a total profit of $15,166 + $140,000 = $155,166

with a starting capital of $2,000 ($1,000 stock capital and $1,000 option capital).

 

I believe that even attaining half of that will make you a very happy trader?

 

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