I was looking forward to trading this morning, but when I first looked this morning, things weren't looking very good. I like to trade a PCS, which profits when the price goes up. I wanted to see the mostly GREEN marketwatch, and a strong bullish trend already underway.
Here is what the marketwatch indicator looked like..
It looked mainly green, but not as much as I would like to see.
So, on to the hourly chart..
This, to me, looked very BEARISH, not the condition I prefer to trade on a thursday. It did seem like maybe price was turning up, let's check the 15-minute..
15-minute was more of the same. Maybe price was changing from its bearish move, but I don't trade 'maybe'.. I chose to wait a couple hours and let price make up its mind.
Fast forward to just after 10am and price had indeed turned up and was consolidating some.
this is on 5-minute chart
I waited for the move up to continue and entered. Let me point out that the last hour of the SPX market is known as Power Hour, and it's quite wild and crazy sometimes. I try not to trade it, but the bullish conditions looked very good to me. So, to give myself some more wiggle room before my trade might get stopped out, and also increase the credit I receive on the trade, which actually allows me to choose a lower delta strike.. increasing my chances of profit.. I chose to increase the wings on my trade (also called the spread width) by 3x what it normally would be. This does increase my odds of success, but also costs me much more in buying power. (the deposit held in my account for the trade, by the broker)
I wanted to mention that, another thing (why I prefer not trade during power hour) it that those open order don't always work. It's late in the trading day and another trader is needed to close my trade, by opening an opposite one. If, like today, price is moving strong in one direction, then no trade is likely to go against that move, and so my limit order never fills. The good thing about this is it gets u a bit more profit if all ends nicely, and there are NO comms/fees for closing that option.. it simply expires. :)
This snap of the option chain about 15 minutes from end of trade shows that my trade was already at delta 4, or at a 96% chance of profit. No trader would take the opposite trade.
All in all, it was a good trade. I traded much more like this, last year. I would much rather be in a trade like the one I had yesterday. I would say that was 99% perfect for how I like to trade. More on that soon..
