Expanding on the index trading just a little bit

I decided to take a few minutes and go back to last week and do some math to support the idea of option trading the the QQQQ based on the daily bias.

The price opened on the primary pivot point and headed steeply down.

Trading the stock would have produced about 70 cents per share, $70 on my 100 share trade while trailing the stop at 1/2 PPs and a full $1 near EOD closing.

Going back to the options and trading strictly the next option expiry is a lot different.

The July 23 44 puts traded at 0930h at 20 cents... so I figure that a market order at the open might have cost 25 cents (I cannot see the quotes, just the actual traded options). A 25 cent option with $500 to trade with is a 20 contract trade. The first exit has the option selling at 40 cents and the EOD exit lowest was 47 cents.

Compared to the $70 and $100 stock trade profits these profits are in the neighbourhood of $300 and $440. Even if I flubbed the trades and only snatched half of the move with options I still make 50% more on the smaller trade than nailing the stock trade on the high side.

Thursday was a $240 day.

I am sure that day one will be either mediocre or a loss but I will get this going and figure out what an acceptable loss per trade might be and see how it runs long term.

Jeff.