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Here’s a snap shot of my Theta Delta Options Calculator.
Within it we can see where we could be after 5 days minus Theta (Time) + Delta (1 point moves)
For every 1 point that SPY moves up on a $1,000 trade we will see the position move up by $184.65 for the ATM 195 SEPT CALLs vs $289.49 198 SEPT CALLs
A 4 point move from here will double your money for the 198 CALLS
On a day to day basis the Delta and Theta will of course change but this just gives you a little heads up.
Anything less than SPY moving up higher than 1 point (10 points $SPX) will be negative for our position after 5 trading days.
The Exponential Moving Average differs from a Simple Moving Average both by calculation method and in the way that prices are weighted.
The Exponential Moving Average (shortened to the initials EMA) is effectively a weighted moving average. With the EMA, the weighting is such that the recent days prices are given more weight than older prices. The theory behind this is that more recent prices are considered to be more important than older prices, particularly as a long-term simple average (for example a 200 day) places equal weight on price data that is over 6 months old and could be thought of as slightly out-of-date.
I thought I would share with you how EMA’s are calculated as I had another nice little message from the Anon last night.
If my understanding is correct because we have had RECENT days of demand that will push the SD20EMA indicator higher.
Well there you go.
P.S we shouldn’t be hearing from that particular Anon (ass hole) again because I’ve been able to block his IP Address thanks to a unique setting on Tumblr :-)
SPY has is up 1.03 points on the 7th trading day. I’ve spoken about how the 5th, 7th and 10th trading days are important because if SPY isn’t shown to be up within any of those days i believe that the markets will turn in to a full blown bear market.
So for SPY to be up on the 5th and now 7th trading day this has me believe that if the markets are not going in to a full blown bear market the only other way they can go is UP.
SD20EMA is moving higher and higher and is now at -132.28 which is still below zero but trending in the right direction fro higher prices.
When SD20EMA is below zero and moving higher it’s a sign that big / smart money is entering the markets again. The dumb money hasn’t yet caught on to the fact that we are going to see higher prices because the dumb money is looking for confirmation from all the lagging price indicators.
When the dumb money finally starts to believe in the move the smart money will be getting out.
The cycles always repeat and this time will be no different.
I have an 85% chance that this trade will turn out to be a winner. If it turns out to be a losing trade so be it. Losing doesn’t bother me. The only time I hate losing is when I don’t stick to my trading plan.
Right now that trading plan is to sit tight and only sell when SD20EMA moves back below zero after being above zero OR when SD20EMA moves back below it’s own 5 DAY MA when above zero. Whatever comes first.
I respectfully disagree with your statement that your methods do not follow price. If you are using and type of scanning technology price is somehow a factor. Be it stocks that are above a certain moving average or stocks that have moves a specific percentage or what not the baseline is that movement is a derivative of price. So if you are scanning its related to price. All charts and indicators are based on price movement unless you are using volume or time function into your calculation.
Very well said and I agree with you to a certain extent. If I divulge anymore I will be giving vital clues away as to how I obtain my numbers.
The numbers are obtained from all US stocks and if course every stock has its price. But types of movement within all those stocks paint a picture for where we are in regards to supply and demand.
That supply and demand ultimately pushes the markets higher or lower. The market price is the result of that battle between supply and demand.
I’m sorry for these quick answers because I’m replying on my iPhone. I really need to be in front of my computer and keyboard to answer these great questions in more detail.
You had me thinking so i looked at the $NYAD on stockcharts and used a 20EMA and 5MA as you do and used a -250 trigger and a cross over of the 20EMA and 5MA as a exit signal and you will be surprised how well it works. I guess in essence it is the same the NYAD measures the difference between supply and demand defined as advancing issues (demand) minus declining issues (supply). So i guess its all how you measure supply and demand. NYAD works very well. Check it out. Thanks again.
I scan the markets using up to 6 different websites and brokerage scanning systems and add up all the numbers that they spit out.
That’s as much as I can tell you really without giving away my methods.
The SD20EMA is taken from the daily difference between SUPPLY and DEMAND totals that the scans pick up.
I’ve had numerous people tell me about the $NYAD :-)
I can tell you that my methods do not follow price. They are separate from price so they are not dependant on price.
Price is an illusion. Supply and Demand is the truth.
I thank you for taking the time in asking the questions. It’s very much appreciated.
I think your SD20EMA will move higher but it has little to do with what the market is doing. Instead it is based on how it is calculated. EMA 's are front weighted so any day with a large SD number will skew the numbers initially and become less and less important as the days go by because their weight is reduced as part of the calculation. So unless you get a daily SD that is no less than the current 20SDEMA value the indicator will continue to move up or go sideways at the very least.
You make a lot of valid points and I of course welcome that but SD20EMA shows us exactly what is going on behind the scenes because supply and demand is what ultimately makes price.
When SD20EMA is above zero it’s a sign that the markets are in a demand cycle.
Demand = higher prices
And when above zero the SD20EMA can downtrend but it’s still demand. When above zero and down trending its a sign of big money getting out vs dumb money getting in and the cycles repeat and repeat.
You can’t trade from the SD20EMA it’s there as just an observation as to what’s going on behind price.
Thanks for the comment
So your exit condition isn't an either or condition but really arbitrary meaning that the 5ma can cross below the 20SDEMA and you will still will be in the trade because you will just 'hope' it will go up. Also you didn't really answer the question as to why you use a 5 SMA my guess is that was an arbitrary decision as well. Not to sound snarky but there doesn't seem to be any real defined trading plan when it comes to managing the trade only how to get into the trade which anyone can do. .
I answered the exit questions and it’s all backed up by historical facts.
If we get a sell signal below zero it isn’t going to be a very strong one so it PAYS to wait it out…
Did I mention the word HOPE ?
NO I DIDNT
The sell signals are all part of the plan… Look at past charts and you’ll see the exit strategies in plain text and in plain sight.
The 5 MA is a better suited indicator for following the SD20EMA. If I used a 5 EMA that would be the same as a SD100EMA and with hindsight of all the historical data the 5 MA outperforms the 5EMA WHEN FOLLOWING THE SD20EMA INDICATOR.
Stop being a jerk
So what is the exit strategy? 'SELL' when either the SD20EMA moves below its own 5MA or when the SD20EMA moves below zero? A rally here may not necessarily mean a move above zero. The 5MA is very sensitive and can move back below the SD20EMA on the slightest down move. So are you going to exit at that point? Also why do you use a 5 day SMA but a 20 day EMA? Seems odd since the EMA applies more weight to recent prices where the SMA is equally distributes price. .
SD20EMA should move above zero within the next 10 trading days. If it doesn’t we continue to hold until it does.
We sell using one of the exits you mentioned. I don’t yet know which one I’ll use, it all depends on time decay really.
SD20EMA moving below zero as a sell signal doesn’t really sit well with time decay so I’ll probably go with SD20EMA’s moving below its own 5 Day MA when above zero
What seems odd to you makes perfect sense to me.
"What’s normal to a spider is chaos to the fly" - Charles Addams
I’ve been doing a little bit of research in to how far the markets sell-off after a buy signal is triggered and the 20 point stop loss gets hit for the SPX.
- The average amount of points (SPX) falls after a buy signal is 39.60
- The average time (days) it takes to hit the low before markets rally again is 4 Days.
- Longest Number of Days = 9
- Lowest Number of Days = 1
- Highest Points Fall = 62.55
The latest buy signal
- Lowest points drop (so far ?) = 20.37
- Number of days = 4
This leads me to believe that the sell-off is over. I could of course be easily wrong but that’s my speculative opinion right now.
I’ll be doing a lot more research in to the relationship of the SPX being up or down on the day of the buy signal.
And also if SD20EMA is moving higher or lower on day of the buy signal and day after the buy signals.
Markets never ever repeat themselves but there is a rhythm to them