--- In OptionClub@yahoogro
> Has anyone taken Darlene Nelson class on trading the qqqq's. how many
contracts you need to trade to make a thousand a day.
David, she talks about this in her video. Did you watch it?
--- In OptionClub@yahoogro
> Looks to me like you make $1000/day by putting on a blue dress and
high heels picture of yourself smiling
Ross, you wouldn't want to see that picture, trust me.
> and tell everyone to sign up for a free course on how to make
$1000/day trading q's and then sell all the emails you get to spammers.
Ha! You're an even bigger skeptic than I am.
But it's a slow day, and I couldn't resist: used a throwaway account
(thanks, spamgourmet.
She's so cute: all bubbly and breathless with enthusiasm. Even Ross
couldn't help but love her.
The idea is simple:
1) Use technical analysis (some sort of pivot points) to identify the
likely top or bottom of a short-term (intra-day) trading range.
2) Buy QQQQ calls or puts, depending on the direction of the trend, with
at least four weeks to expiration, and a delta of at least 70.
3) Put in a GTC order to sell for a 0.10 profit. You want to hold this
for 1-2 days at most.
For example, right now the markets are closed; but yesterday afternoon
QQQQ closed at 35.60, and let's say our TA suggests it's still going
down. July only has 14 days to go, so let's use August. We can buy an
Aug 38 put, with a delta of 77 and IV of 22.8%, for $2.85. To get our
0.10 profit, the underlying would have to drop by 0.10/0.77, or about
$0.13, to $35.47.
How many contracts? Well, to make $1000 on a 0.10 change you'd
obviously need to be long 100 contracts. That's $28,500 worth, plus
commissions. This buys you -7741 delta, 1007 gamma, -92 theta, and 391
vega -- so let's hope you're right about your direction!
(In the video, she mentions $1-cost options, buying 100 contracts for
only $10,000. But 70+ deltas for $1? I don't see that anywhere on my
screen, not at today's volatilities. Right now even the July options
would cost at least $1.50 for that. Begs the question of when the video
was made...)
Now, just so we're clear, I'm not recommending this strategy to anyone!
I am merely your humble reporter. But what do people think?
To me, this all sounds plausible, but dangerous.
I've never tried a pivot point system, so I have no idea how well that
works. But getting a $0.13 move in the QQQQs is no problem: there
hasn't been a day with a range less than this in months. So if the
system is at all effective at catching the short-term trend, then making
a 0.10 profit in 1-2 days is certainly possible.
The position sizing is the scary part. At one point it sounds like
she's suggesting that people go all in on this -- grow your account with
smaller trades until you have $10,000, then use that to trade
100-contract lots! Good luck with that.
Also, the promo video doesn't answer the most important question, which
is: What if I'm wrong?? I assume that the full course goes into this in
detail. If you're going to put so much of your capital into one trade,
and the pivot point system gives you a bad signal, you'd better have
some very tight stops in place! The trend can go a long way against you
in a hurry.
Finally, the site itself looks pretty dubious. Lots of get-rich-quick
hype, over-the-top graphics, high-pressure sales pitches, and so on. A
telling sign is that the site doesn't even show prices; you have to call
a 1-800 number to order the course. You can just imagine how that call
will go -- how much of a spiel you'll have to sit through before they
think the hook is set firmly enough that they can reel you in.
But, David, do let us know if you order the thing! It'd be interesting
to see whether, and how, they address the points above.
Martin
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