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Options Trading Potential

Dale Whaeatley was a contractor who traveled around the country helping the telephone companies with their excess needs that they could not handle in-house. As with any type of contract work, it was inconsistent. It was difficult for him to budget his money not knowing what his income or expenses would be. Dale went looking for an alternative source of income. He attended the usual Real Estate seminars, but realised he had no real interest in becoming a landlord or managing property. Instead he turned to stocks.

Dale had played in the stock market in his 20s, but didnt understand it. He decided to educate himself on stock trading. During this process Dale read how options offered limited risk and unlimited potential for gains, a strategy that appealed to him. To learn about when to trade, he read many technical analysis books and spent over $500 a month just for quotes and charts. he also plotted many charts by hand. Years later, he discovered a company called AIQ Systems and bought two of their programs, TradingExpert and OptionExpert. Still, all Dale was doing was spending money with no return to show for it. It was not until he sat down and examined his winning and losing trades, comparing them to the charts and indicators, that he finally began to discover the value in one particular indicator, the MACD, known as the Moving Average Convergence Divergence. He knew that when one line crossed the other it meant to buy or sell, but that did not work well or consistently, both requirements for trading options, since they are wasting assets. By examining divergences in the MACD indicator, however, one could tell when a stock was ready to change direction with a great degree of reliability. He concentrated on perfecting his entry and exit strategy using this indicator, but incorporated various indicator time frames, a process Dale had never seen done before. Soon Dale's returns were improving dramatically.

Why did Dale choose options rather trade the stock itself? Options offer incredible potential that stocks can never give us. Plus chart patterns develop clearly enough to see definite direction changes that will produce returns in excess of 1,000% in hours, days, or weeks depending on the strength of the pattern relative to the price. Dale's philosophy is simple, he doesn't want to ownťanything! He just want to make money to do the things he wants, when he wants. Sometimes the chart patterns looks so strong that Dale is sometimes limited by the number of contracts he can buy at one time.

The pattern of the underlying security is of primary importance in Dale's trading system. He does not use any pricing models such as the Black-Scholes pricing formula or any other valuation method. These formulas are not designed to help make a profit on options, but rather to show what happens if the underlying stock performs in a certain fashion. There is nothing that can Dale can do about the options prices. Whatever the bid and ask prices are that is what he has to pay. It's the surety in the trading startegy that is paramount.
About The Author Information on The Options Hunter Service can be found at http://www.aiqsystems.com/optionshunter.htm
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