Monday’s Levels
Friday Recap: We had a good day
Friday with a profit of $220 and a good week with a profit of $670. That’s
close to a 7% return on our average margin requirement in one week.Â
In Friday morning’s report posted before the
start of cash trading it was predicted that the markets would start the day
lower. However the report also said that ultimately the cash Dow would touch
both sides of the flat line and move higher with a test of the 10400-30 region.Â
In fact on Friday, the cash Dow started the day briefly lower before quickly
moving higher to test the 10400-30 level. From there the cash Dow moved back
and forth until late in the trading day news came out that the American hostage
Paul Johnson had been beheaded, which sent the market reflexively lower before
finding support near the end of the day to close at 10416, up some 39 points on
the day.Â
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Charts from www.stockcharts.com
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Prediction for Monday:Â On the
cash Dow we’re probably going to start the day by testing resistance near
10430. I don’t think the Dow is going to clear and hold this level on the first
time today, but ultimately I think this level will be cleared. Once the Dow
clears and holds 10430 we’ll be on our way to touch 10500-50. Once we reach
this level I think we’ll consolidate for a few days and test support. Below you
can see the chart we posted near the begining of last week, the only additions
being recent price action our next target lines near 10500-50.
Below is the S+P chart posted last week, with the
only addition being recent price action. Ultimately this week I expect the S+P
to test the 1150 level this week. On the way higher sellers will likely come
out at 1137 and 1142.
Portfolio Strategy:Â I’m going
to watch for a test of lower levels in early trading Monday.  At that time,
we’re going to get a little additionally delta positive or when the Dow futures
get close to the flat line.
Previous Day’s Results and Current
Portfolio Status:Â Â
Daily Profit: $220
Weekly Profit: $670
Â
10100 June Mini Dow Put Option: We are short one put option. Yesterday it
expired worthless. Profit yesterday with this position was $5.
Â
9700 June Mini Dow Put Options: On 5/24/04 we sold one put option for 70.Â
Yesterday it expired worthless. Profit yesterday with this position was $5.
9900 July Mini Dow Put Options:Â On 6/18/04 we purchased 4 July put options for
32. Yesterday it closed at 32. Profit yesterday with this position was $0.
10300 July Mini Dow Put Options:Â On 6/16/04 we sold 4 put options for 123.Â
Yesterday it closed at 105, down 12. Profit yesterday with this position was
$240.
10600 June Mini Dow Call Option: We are short one call option. Yesterday it
expired worthless. Profit yesterday with this position was $5.
10600 July Mini Dow Call Options:Â On 6/10/04 we sold 2 call options for 64.Â
Yesterday it closed at 50, up 10. Loss yesterday with this position was $100.Â
Mini Dow Futures: We came into the day flat the mini Dow future. We sold one
mini Dow future at 10410. The mini Dow closed at 10397. Profit yesterday with
this position was $65. We are short one mini Dow.Â
Estimated Margin Requirement (may vary from
broker to broker): $9,578
Current Delta: -58.97
Current Gamma: 53.13
For questions e-mail,
subscriptions@dowoptionstrader.com
Trading Method:Â Mark Melin strategically short sells options and then
directionally trades within this short options portfolio, always hedging one
position against another to generate consistent profits.
DISCLAIMER:
Past performance is not necessarily indicative of future results.
There is a substantial risk of loss in commodity futures and options trading. It
is not suitable for all investors. Only you can determine whether this trading
suits your particular needs and risk tolerance.
All profit and loss representations are hypothetical and based on the real time
signals generated by The Dow Trader. The results have not been adjusted to
reflect slippage or commission charges. No representation is being made that
any account will or is likely to achieve profits or losses similar to those
shown.