rading Weekly Options
using Ichimoku Cloud
“KeeneontheMarket.com” (“KOTM”) is not an investment advisor and is not registered with the U.S.
Securities and Exchange Commission or the Financial Industry Regulatory Authority. Further, owners,
employees, agents or representatives of KOTM are not acting as investment advisors and might not be
registered with the U.S. Securities and Exchange Commission or the Financial Industry Regulatory.
IMPORTANT NOTICE! No representation is being made that the use of this strategy or any system or
trading methodology will generate profits. Past performance is not necessarily indicative of future results.
There is substantial risk of loss associated with trading securities and options on equities. Only risk capital
should be used to trade. Trading securities is not suitable for everyone. Disclaimer: Futures, Options, and
Currency trading all have large potential rewards, but they also have large potential risk. You must be
aware of the risks and be willing to accept them in order to invest in these markets. Don’t trade with
money you can’t afford to lose. This website is neither a solicitation nor an offer to Buy/Sell futures,
options, or currencies. No representation is being made that any individual, group, or entity will or is likely
to achieve profits or losses similar to those discussed on this web site. The past performance of any
trading system or methodology is not necessarily indicative of future results.
Visit our website below to read the full disclaimer.
http://keeneonthemarket.com/disclaimer/
Andrew Keene
- Floor Trader @ CBOE 10+ Years
- Market Maker in Over 125 Stocks
- Active Trader in Futures, FX,
Stocks & Commodities
- Regular Contributor to CNBC,
- Bloomberg, CBOE
& BNN
Weekly Options
•
This is the BEST time ever to trade Options: Markets are Tighter, Penny Wide, and
More Liquid that Ever
•
There are 8700 stocks and 4200 stocks with options.
•
Of the 4200 stocks with options, there are over 320 stocks with listed weekly options
•
CBOE lists weekly option on indices, stocks and ETF’s
•
CBOE publishes a list of all assets with weekly options
•
Gives traders 52 expirations to trade instead of 12
•
Weekly index options accounted for 11% of all index options volume in 2011 and this
number has only grown over time.
Weekly Options
CBOE has tracked the increase in weekly option volume since they have been launched.
Weekly Options
Why should a trader want to trade weekly options?
- Stocks are boring, they move 1-3% on a BIG move and traders have to outlay
huge amounts of capital to own stocks.
- Due to inherent leverage, options can take returns and magnify them. Small
moves in the underlying stock can lead to HUGE returns using weekly
options.
Weekly Options
Why should a trader want to trade weekly options?
- Pinpoint a Catalyst: Whether a trader wants to trade AAPL or GOOG for
Earnings or GLD and TLT for the Fed Announcements, Weekly Options
represent the best opportunity to trade the catalyst and then not hold a
position after that catalyst. Decline less in value from resulting implied
volatility drop post-news than standard options
- Because there isn’t much time in the contracts life delta can explode as
options move even the slightest bit in the money.
Weekly Options
The Best Stocks to Trade Weekly Options:
The best stocks to trade are stocks with a catalyst:
Weekly Options for a stock that has Earnings: We always use weeklys to trade earnings
announcements. Using weeklys givers us the best exposure to the event
Economic Data Releases: The SPY, GLD, and TLT for Event Driven Events such as Economic
Data, Fed Meeting.
Do NOT trade Options where the ATM straddle on Monday is less than $.75, this is a
commission killer and hard to beat the ‘juice”
FB 5 Min Bar
9
Components of the Cloud
The Tenkan-sen Line: Short Term Trend: Similar to 10 Period MA
= (highest high + lowest low)/2 over the last 9 periods
tenken-sen line
10
Components of the Cloud
The Kinjun-sen Line: Longer Term Trend: Similar to 30 DMA
= (highest high + lowest low)/2 over the past 26 periods
Kinjun-sen line
11
Components of the Cloud
Senkou Span A: Future Short Term Trend
= (tenkan-sen + kinjun-sen)/2 plotted 26 bars in the future
Senkou Span A
12
Components of the Cloud
Senkou Span B: Future Long Term Trend: Fib 50% Retracement
= (highest high + lowest low)/2 over the past 52 bars plotted 26 bars in the future
Senkou Span B
13
Components of the Cloud
Kumo “the cloud”: How Hard or Easy it is to Break the Trend
Kumo
14
Components of the Cloud
Chinkou Span Line: How does the Today’s Price compare to last Month
= current bar’s closing price plotted 26 bars back
Chinkou Span Line
15
This is the second bar of the
day, FB breaks the cloud to the
upside
16
ATR Implied Move
Targets Hit
Cloud
Breakout
17
Trading Weekly Options With the Ichimoku Cloud
My Trade:
ENTRY to Open and filled: I bought 40 FB weekly 62 Calls for $.41: Targets: $.55 and up
every $.15
I sold 10 of FB Weekly 62 Calls for $0.55
I sold 10 FB weekly 62 Calls for $0.70
I sold 10 FB weekly 62 Calls for $0.85
I sold 10 FB Weekly 62 Calls for $1.00
Look how the stock moved…
Trading Weekly Options With the Ichimoku Cloud
How Do I Pick Targets?
Trading Days
Up Days
FB Statistics
for YTD on May 2nd
83
36
43.37%
Down Days
46
55.42%
Average Range
2.20
Standard Deviation
5.17
Trading Weekly Options With the Ichimoku Cloud
Summary:
•
Weekly options offer a trader more expirations than standard options
•
Generally these options trade at a lower price than standard options
•
These options expire on Friday, listed the Thursday before.
•
Weekly options can experience fast, violent moves in delta
•
Can use the as a vehicle for trading during the day in stocks like FB, TWTR, AAPL, and
TSLA
SPECIAL TOPIC COURSE June 3rd :
Trading Weekly Options Using the Ichimoku Cloud
 Iron Condors (30-40% Returns if Stock Stays a Wide Range)
Iron Butterflies: Make Money if Stock Doesn’t Move at all or
only a little bit (200- 400% Returns)
Butterflies Using Measured Move Target to get 500% Returns
in Days
Calls on the 5 Minute Bar: AAPL, FB, TSLA, TWTR (Double
Money in Hours)
312-261-5581
$97
http://keeneonthemarket.com/wichimoku