Options made very easy

To make money as an option trader you must be: A bargain hunter. Able to identify undervalued and overvalued options. Know when to take profits and when to cut losses.

How would you like to know when to buy and sell options for maximum gain? How would you like to take the guessing out of trading? How many of you would like to minimize the risk in straight options? How would you like to learn about the hottest strategy on the market ?

The Gragg Strategy

SETUP Go to On the left side of the screen click on the Stock Scans link. After the predefined scan link appears scroll down past the technical indicators section, to the Candlestick Pattern and the P&F Patterns and look for reversals.

SETUP Go to Predefined Scans. Select the pattern that you like (Technical Indicators, Candlestick Patterns or P&F Patterns). Select the Equities Exchange (NASDAQ, NYSE or AMEX). You will see an underscored number indicating the # of stocks that were located. Click on that underscored # You will get a listing of the specific stocks it found Click on the underscore Open button. This will sort the list from the highest to lowest price Don’t use any stocks with a Volume under 500,000.

From this list select the stock symbol. Reading from left to right click on the second box for that stock symbol. SharpChart will appear, from here you will analyze the stock. This strategy works best when we find stocks that are in a overbought/oversold position Relative Strength Index (Values above 70 are considered overbought and values below 30, oversold. When prices are over 70 or below 30 and diverge from price action, a warning is given of a possible trend reversal. ) Slow Stochastic (below 20 considered oversold and readings above 80 considered overbought )

RSI EXAMPLE

GALLERY VIEW Three charts will appear: daily, weekly and point and figure On the daily chart each candle represents one day. On the weekly chart each candle represents one week. You will see price labels on the daily and weekly charts, if the price labels point down it is a Put signal and if they point up it is a Call signal. Take the last signal on the weekly chart and find a match on the daily chart. On the following charts you can see the weekly and daily price label match at $48.07.

DAILY CHART

WEEKLY CHART

GALLERY VIEW When there is a match it tells you what to do. In this case since the $48.07 is pointing down you would buy a put. If the $48.07 was pointing up you would buy a call. Confirm price direction on PPO (Percentage Price Oscillator) chart, located above the daily chart. If black line crosses the red line it indicate reversal of trend.

GETTING A MATCH Once you get a match between the weekly and daily charts: Write down Stock Symbols. Go to your Virtual Account and place the trade. Buy options “ At The Money “ or “ In The Money ” two to three months out.

GETTING OUT OF THE TRADE You can close out the position at any point based on your risk tolerance 20%, 50% or 100% return. Or you can place a trailing stop order based on your risk tolerance. Or you can wait for a Match to appear to close out the position. For example in the case of the stock GLG we currently have a Put match of so we bought a put option, we would wait until we get a Call match to exit the trade.