The Volatility Index (VIX)

Uncategorized Aug 03, 2021

Volatility Index is an innovation that provides options traders with the opportunity to achieve spectacular returns rarely present in other options markets. 

The index is based on the implied volatility present in 30-day S&P 500 options. In truly efficient markets, this can reliably be seen as the market’s expectation of near-term volatility. Thus, once the index is created, traders can implement a view of volatility isolated from other variables common to option pricing, such as underlying asset prices, dividends, and even days to expiry. 

The VIX’s volatility becomes a tradeable commodity and allows a straight purchase or sale of volatility, 

The VIX has a well-defined historical correlation with the S&P. History shows that equity markets rise at a far slower rate than they fall. As such, the historical volatility of the S&P is inverse to its price. 

This makes the perfect timing tool for equity markets. When the VIX is low, the markets...

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Bullish MACD Divergence -Trade Analysis IWM

Uncategorized Jul 01, 2021

Bullish MACD Divergence -Trade Analysis IWM

The Options Hunter Approach is based on four distinct aspects 

Step 1: Divergences in technical indicators warn that the current trend is losing momentum in the short term. The stock or index is making new highs or lows, and the MACD indicator does not confirm new highs or lows, which is known as a divergence.

Macd Divergences can be Bearish or Bullish and signals to option traders a potential opportunity for extraordinary gains. Divergences can occur in any timeframes and with many indicators, but we’ll address multiple timeframes in-depth shortly.

The Options Hunter approach focuses on divergences between the MACD and the price action. We don’t employ other indicators such as RSI, Stochastics or Bollinger bands as we keep our approach simple, straightforward, and repeatable

15-minute Chart

  

In this example, we’ve identified a Bullish Divergence on...

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Bullish MACD Divergence -Trade Analysis NIO

Uncategorized Jun 14, 2021

Bullish MACD Divergence -Trade Analysis NIO

The Options Hunter Approach is based on four distinct aspects 

Step 1: Divergences in technical indicators warn that the current trend is losing momentum in the short term. The stock or index is making new highs or lows, and the MACD indicator does not confirm new highs or lows, which is known as a divergence.

Macd Divergences can be Bearish or Bullish and signals to option traders a potential opportunity for extraordinary gains. Divergences can occur in any timeframes and with many indicators, but we’ll address multiple timeframes in-depth shortly.

The Options Hunter approach focuses on divergences between the MACD and the price action. We don’t employ other indicators such as RSI, Stochastics or Bollinger bands as we keep our approach simple, straightforward, and repeatable

Daily Chart

  

In this example, we’ve identified a Bullish Divergence on the MACD indicator in a striking contradiction to the...

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Interview with Options Expert Dale Wheatley in Traders World

Uncategorized Oct 06, 2020

  

Traders World:  What is your background before you started trading options?

Dale: I was a Telephone Contractor for many years and needed and wanted an investment vehicle that could travel with me, one that was not too complex.

I studied all about different investments such as real estate, buying discount mortgages, tax certificates, etc. as well as the stock market, but none of those things seemed simple enough for me to control myself without a great investment of time and money.

I simply did not have much time to devote to those things since I worked 100-hour weeks and moved around the country doing storm reconstruction for telephone companies, etc.

I accidentally happened across options in the mid-1980s and I immediately saw the advantage of the limited risk-vs-potential returns.

TRADERS WORLD: How did you get started in trading options?

Dale: I began trading options in the mid-1980’s. I read every book I could find about options...

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Hourly MACD divergence on CVX and XOM reaped 500% next morning

Uncategorized Sep 18, 2020

Can't really miss these divergences on the hourly charts of CVX and XOM and picking up the out of the money option before the close on 9/15/20 was perfect timing.

Entry in the last 30 minutes of the trading day as the stocks just started turning up was ideal. The  XOM September 18, 37.5 calls could have been  had for 11 or 12 c. The next day they were as high as 83c. An alert trader could have taken 500% gain, and with over 2500- 3000 contracts trading a day the spread was reasonable.

The CVX September 18, 79 calls could have been had at a similar time to XOM in last 30 minutes of the trading day for 12c or so. By the next day they traded as high as 1.06. Spread wasn't as nice as XOM as volume was 300 - 500 contracts but again 500% gain was easy to make.

 

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Monthly MACD Divergence on Retail Sector shows the Way

macd macd divergence Jul 29, 2020

In spite of the bad news on retailers, I see many with strong monthly MACD chart divergences: BBBY, which I showed weeks ago in class & also LB, BGFV & many others. How can YOU find these before they begin their strong up moves? By doing exactly as I teach!

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MACD Divergence show Pressure on the Indexes

With all of the major components like AAPL, MSFT, AMZN down, it must be putting pressure on the indexes that they are a part of & how about Volatility(VXX)? Is is showing any clear upside patterns? What about the short indexes like SPXS & QID? Do we get “confirmation” from these?

 

VXX 30 minute MACD divergence 7-23-20

 

SPXS 30 minute MACD divergence 7-23-20

 

QID 30 minute MACD divergence 7-23-20

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MACD Divergence on the VXX is the Trade

Uncategorized Jun 17, 2020

At 1:45pm eastern on June 12 the 5 minute chart on VXX made its way to the high it had reached 2 3/4 hours earlier, but we were concentrating on the MACD indicator. The MACD had a clear divergence indicating that the price action on VXX shouldn't be at $45 but more like $40 or lower based on the slope of the MACD peaks

 

As predicted the price dropped to below $40. this powerful move down is often reflected with a reverse MACD divergence up on the SPY. In this instance as the chart below clearly shows, there was not one in the offering. So we went back and looked at the VXX puts for big gains on the near term OTM options.

 

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MACD Divergence shows the Way. It ain't rocket science,

macd macd divergence Apr 16, 2020

So, I'm sure there are many options traders, who are now at home and work, maybe even have a full house of family members. My commitments used to disqualify me from doing intraday options trading, not anymore, now I'm trading on intraday charts looking for MACD divergences and double tops and bottoms like the Options Hunter does. 

I'm no Dale Wheatley, I'm still learning and cautious with my trades but I can tell you for a fact that this strategy works for me, it really does. The daily chart of BA had a strong MACD up that really gave the confirmation of the 5-minute divergence Dale looks for.

He tweeted this yesterday. Those calls really took off. It was on 5 minute bars so we knew it wouldn't last forever. I'd have exited when the price pulled back around 10:45 but that's me being conservative. Could have stayed the course for the real MACD turn down later in the day.

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Bullish MACD Divergence on VXX means Markets are Headed Down

macd macd divergence Mar 27, 2020

 

This is a daily chart with a clearly defined UPSIDE DIVERGENCE on VXX, the Fear Index. The time between the first price bottom to the second one, when the divergence occurred, was approximately one month, from late Jan through late Feb 2020.

 

 

That suggested the up move in VXX and down moves in the major markets and component stocks should last approximately 1 month before the MACD begins to stabilize. Around March 18-20, 2020.

 

The lower time frames on VXX started showing MACD rolling over and some Downside Divergences, the SPY, QQQ, IWM, XLE, SMH, XLF and most major component stocks then began showing  UPSIDE divergences

producing huge returns on OTM calls.

 

 

 

 

 

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