Index trading needs some work, the plans.

I could not sit by and not place a trade on my index trading idea. I always find that putting money on the line keeps my attention to the matter at hand better than just sort of watching it. This prompted me to recall an old idea I had in taking two sides of a position in order to capture an overall move, sort of a stopped hedge idea.

I'll get to that later, or it may just be plainly obvious in a moment, or the next post anyway.

The overall idea is to trade calls or puts on the ETF using the price activity to trade with the trend and daily bias for the day using the Pivot Point (PP) and Support and Resistance levels (S1,2,3 and R1,2,3) for entry determination. I figure that using the PP would be the best but the other levels may be suitable under certain circumstances.... today for example.

Any further planning is really just guidelines to use to manage the position once entered.

Plan ONE is to use the very next PP or Support or Resistance level as a target to exit the option trade. Quick in, quick out and quick profits. Use for neutral or light days.

Plan TWO is to use the Support and Resistance levels as stops, once the price of the underlying index ETF (QQQQ in this case) passes each level the one immediately preceding is then the new stop... or move the stop as if a VTSO based on the space between the levels. Use for more heavily biased days or when the stock price takes off and allows early stop setting in profit.

Plan THREE is to enter initially and close near the End Of Day (EOD) in order to take advantage of large intraday trending moves. Sort of the default ini the case where nothing else gets hit and I want to exit to be in cash overnight... no holding these overnight.

Plan FOUR is to set a target of 100% profits. Based on the initial price of the stock I would set a limit exit at 100% of the option price no matter what the stock is doing. This is not so much a total plan as an add on to the exiting ones as I might just use this point as a stop order to secure the 100% gains and perhaps let the price run with a true VTSO (if I can do those on options...I've forgotten now). I might also consider this as a default as perhaps I should be happy with 100% gains and just get out to be out at this point every single time.

In all cases the stop loss will be set to exit the trade if the stock hits the next PP, Support or Resistance level in the wrong direction... that might be 10 cents on the option or so.

Also, I will ALWAYS use the front month (very next expiry series of options) and very close to the money. The QQQQs run $1 strikes so this is very easy.

Jeff.