Self-Adaptive Options & Currency Trading: For the Volatile Markets of the 21st Century

Front Cover
CreateSpace, 2005 - Business & Economics - 215 pages
This book will show you how with inexpensive tools you can begin with a limited amount of capital and make it grow impressively. I describe how the Welles-Wilder Indicator, a relative strength indicator, with equations included, can be used to decide when to open index options, stock options, futures options and currency positions. I have selected the best commodity futures options to trade for short-term profits. A currency trading expert from Madrid showed me the great leverage of one's capital is the outstanding advantage of currency trading. I also describe my self-adaptive trading software, giving you all the equations and algorithms used so you can create your own software at home. I first learned options trading in Brest, France, from the sponsor of my oldest son's 40' racing catamaran. Bob was making $2 million per month trading options in New York. He explained his strategy of selling index-option Calls two standard deviations (sigma) above the market and selling Puts two sigma below the market-the probability of the market rising above the Call or dropping below the Put was less than 10%, meaning you profit 90% of the time. This two-sigma strategy has been adapted to credit covered spreads for generating a regular monthly income.
 

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Contents

Foreword
ii
INDKX OPTIONS FUTURE OPTIONS TECH STOCKS OPTIONS CURRENCIES
13
Underlying Markets
15
A Quick Overview of the Strategies
16
Index Options
18
Stock Options
19
Neural Network Indicator 20 Futures Options
20
Currencies for Trading
21
Common Format for the 5 Excel Spreadsheets
134
Standard Deviation Computations for Currency
135
How to Use the Common Format Spreadsheets
136
Euro Chart with WWI 20 Day Moving Average
137
WWI 80 or WWI20
139
Summary
140
CHAPTER 8 STOCK TRADING USING WWI AS A SIGNAL
141
Results of Applying this Strategy for a Year
142

How Does the WWI Trigger Work?
22
Options Vocabulary
23
Margins for Options Trading 27 Day Trading Requirements
27
Option Codes
28
Currency Vocabulary
31
Objective of Options and Currency Trading 34 Capital Growth Models
34
Summary
37
CHAPTKR 2 OVERALL STRATEGIES FOR TRADING INDEX STOCK FUTURE OPTIONS CURRENCIES STOCKS
39
When Do You Open These Positions? 40 When Do You Close These Positions?
40
The Naked Spread Strategy
41
Examples of Naked Credit Spreads
43
The Covered Spread Strategy
44
Example of a 2Sided Covered Credit Spread
47
The Debit Spread or Long Strategy
48
Currency Trad ing 50 Stock Trading
50
Summary
51
CHAPTER 3 How TO COMPUTE KEY TRADING PARAMETERS
52
Exponential Moving Average Algorithms
53
WellesWilder Indicator WWI
54
Equation for 2 Sigma
55
WWI Computations for
56
Other Market Signal Indicators 57 FourDay Moving Average Difference MAD4
57
Difference Between 9Day and 4Day Moving Averages MAD94
59
The Stochastics KD Market Signal Indicator
60
Complex Market Signal Indicators
61
Summary
62
CHAPTER 4 OEX INDEX OPTIONS
63
Use of the 2 Sigma 2 Standard Deviations for Spreads
64
How to Compute Standard Deviation 2Sigma for Covered Spreads
67
Comparison of OEX SPX DJIA 2sigma Covered Cr Spreads
69
Debit Spreads Triggered by WWI for
71
OEX WWI Chart
75
OEX Capital Growth Model
76
Summary
78
CHAPTER 5 STOCK OPTIONS
79
Stock Splits
81
At Beginning of New Option Month 1st Mon after 3rd Fri
82
WWI 80 or WWK20 83 WWI Computations for Individual Stocks
83
Amgen Stock Options
84
Amgen WWITriggered Long Call Position Example
85
Cisco WWITriggered Long Put Position Example 87 Dell WWITriggered Long Put Position Example
87
eBay WWITriggered Long Call Position Example
88
Ibm WWITriggered Long Put Position Example 89 Intel WWITriggered Long Put Position Example
89
Results of Years Paper Trading for 13 Stock Options
100
Coffee Future Options WWITriggered Debit Spread
113
CHAPTER 7 CURRENCY TRADING WWI TRIGGERED 124 Seven Currency Trading Rules
124
Applying These Rules to the Euro Trading Example 1
133
Buying Holding Stocks as LongTerm Equity Investment
144
Buying and Holding a High Performance Mutual Fund
145
Summary
146
CHAPTER 9 SURVEY OF MARKET SIGNAL INDICATORS 147 Description of Each Market Signal Indicator
147
Moving Average Difference Market Indicators 149 The 4Day Moving Average Difference MAD4
149
Difference Between 9Day 4Day Moving Averages MAD94
150
Stochastics KD Special Mov Avg Indie Difference
152
Bellinger Band Indicator
153
WellesWilder Indicator WWI Market Indicator
154
Neural Networks
155
Summary
156
CHAPTER 10 SOME TIPS TO ENHANCE TRADING PROFITS
157
Use Volatility to Increase Cov Credit Spread Premiums
158
When to Open the Triggered Debit Spread
160
Corrective Action for 2 Sigma Covered Credit Spreads
163
What Do We Do When a Short Put or Call Is Threatened?
164
Summary
167
CHAPTKR 11 GLOBAL GROWTH MODEL
168
OEX and Stock Options 4Year Growth Model
169
Commodity Future Options Growth Models 170 Currency Growth Models
170
Global Capital Growth Model
171
Summary
172
CHAPTKR 12 SELFADAPTIVE TRADINC SOFTWARE
173
SelfAdapStkOp
174
Common Format for the 11 Excel Spreadsheets
177
OEX Stock Options Profit
179
How to Use the Common Format Spreadsheets
180
WWI 80 or WWI20
181
SeIAdaptFutOp
182
Common Format for the 1 1 Excel Spreadsheets
184
How to Use the Common Format Spreadsheets
187
WWI 80 or W WK20
188
Trading Results for 10 Future Options WWI Triggered
189
Summary ofSelAdaptFutOp
190
SelfAdapCur
191
Common Format for the 4 Currency Excel Spreadsheets
193
How to Use the Common Format Spreadsheets
195
WWI 80 or WWK20
196
Summary ofSelfAdapCur xls Software
197
SelfAdapStockTrading
198
Common Format for the Excel Stock Spreadsheets
200
WWI1 riggered BuyingSelling 201 Results of Stock Strategy 2 Buy 200 Shares Hold for 1
201
How Do the Two Strategies Compare Side by Side? 202 How to Use the Common Format Spreadsheets
202
WWI 80 or WWK20
203
Summary
204
Copyright

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