Optionstradingiq.com



DIAGONAL CALL AND PUT TRADING PLANOverviewThis trading plan is designed to help improve overall trading results by setting rules and guidelines to follow at all times.ObjectivesShort term trades for small gains of 1-3%To enter the trade for a small credit if possible, otherwise a small debit is ok.To keep a trading diary and review it weeklyTo avoid large lossesSelecting a MarketTrade the following instruments:RUT, SPX, GOOG, AAPLCapital Allocation$10,000 for calls, up to $15,000 for putsSelecting a Trading StyleTrading will focus on Weekly Diagonals with between 3 and 10 days to expiry. We will use the daily and 30min charts for trade entry signals.Worst Case ScenarioA rapid move in the direction of the short strike shortly after entering the trade, i.e. within 24-36 hours.Best Case ScenarioStock moves away from the short strike within a few hours and we take early profits. Otherwise, the stock slowly drifts in the direction of our short strike and lands in the profit zone on the Thursday of expiration.Entry GuidelinesShort strikes around delta 10-15Strikes 20 points apart for calls, as high as 40 for putsStrikes are chosen 2 weeks apartEnter for a credit is possibleEnter when the stock is overbought (calls) or oversold (puts) on a 30min timeframeTry to match the 30min timeframe with the daily timeframeIf entering for a debit, keep risk on defined risk side to less than $400Exit GuidelinesIf price gets within 5 points of the short strikeStop loss of 2%Short term profit target – 1% within 4-5 hoursLong term profit target – 2-3%Close on Thursday afternoon at the latest. DO NOT take trade into settlement on Friday ................
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