Tuesday’s Levels

  • May 25, 2004
  • Mark Melin

Monday Recap: On Monday, the
cash Dow started the day higher by testing the 200-day moving average early in
the morning, then quickly selling off to chart resistance near 9930 on the cash
Dow.  From there the Dow traded in the value distribution region to end the day
at 9958.  Overall a lackluster day, and somewhat disappointing for bulls that
the 200-day moving average proved so difficult to break. 

^next^

Prediction for Tuesday:  I’m
going to look for an early test of support on the cash Dow and then a bounce. 
Ultimately I expect some firming going into the holiday week.

On the downside, we’ll watch the 9930 level.  If
that breaks we’ll keep an eye on the 9900 level.  A break of 9900 could indicate
a more serious move to the downside, and then we’ll start to watch the S+P test
it’s 200-day MA. 

Portfolio Strategy:  We’re
coming into the day slightly delta negative.  If support holds we might get
slightly positive.  Stay close to your e-mail. 

Yesterday’s Results and Current Portfolio
Status:  

Daily Profit: $35

 

10100 June Mini Dow Put Option:  We are short one put option.  Yesterday it
closed at 230, down 15.  Profit yesterday with this position was $75.

 

9700 June Mini Dow Put Options: On 5/24/04 we sold one put option for 70. 
Yesterday this option closed at 77.  Loss yesterday with this position was $35. 

10600 June Mini Dow Call Option: We are short two call options.  We bought one
back at 9.  Yesterday it closed at 5, down 4.  Profit yesterday with this
position was $10.

Mini Dow Futures: We came into the day short one
mini Dow future.  Friday the mini-Dow future closed at 9970, up 3.  Loss
yesterday on this position $15.  We are short one mini-Dow. 

Trading Method:  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.

 

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