OCT 1995 STOCKS & COMMODITIES Magazine

Article Archive For OCT1995

A Mathematical Game Plan by Gene Carey

ARTICLE SYNOPSIS ...MONEY MANAGEMENT A Mathematical Game Plan by Gene Carey Here's how the elements of a successful trading plan - profits, losses, commissions and slippage - can be used to quantify performance goals. I t's a given: Operating with a game plan is a necessary ingredient in trading success. A trader needs to develop a plan that suits his or her personality and provides an efficient means of operating in the trading framework of choice, be it intraday trading the Standard & Poor's 500, position trading oats, or anything in between. What does it mean to have a game plan? What is a game plan, ho...

AUTHOR: Gene CareyDATE: OCT1995

Andrew Addison of the Addison Report by Thom Hartle

ARTICLE SYNOPSIS ...INTERVIEW Simplicity for Simplicity's Sake: Andrew Addison Of The Addison Report by Thom Hartle In this increasingly complicated world, it's a comfort to hear that indicators don't have to be complicated to work well, as Andrew Addison of The Addison Report will tell you. Addison, who edits and publishes the newsletter, which is aimed at individual investors and stockbrokers, uses his law-school training to boil down what's important and eliminate the peripherals - a handy thing for those who subscribe to the Report, as well as The Institutional View, his publication for professional fund man...

AUTHOR: Thom HartleDATE: OCT1995

Identifying Powerful Breakouts Early by Tushar S. Chande

ARTICLE SYNOPSIS ...TRADING TECHNIQUES Identifying Powerful Breakouts Early by Tushar S. Chande High-powered breakouts occur with a strong surge of momentum in the direction of the price change. Such breakouts may be short-lived, however, occurring toward the latter stages of a long trend. Sometimes, such breakouts signal the end of one trend and the beginning of another. In either case, identifying such market action early is likely to be highly profitable. Here, Contributing Editor Tushar Chande shows how you can use his original indicators, VIDYA and the dynamic momentum index, to find big market moves. Ta...

AUTHOR: Tushar S. Chande, Ph.D.DATE: OCT1995

OEX Options Expiration Trading Patterns by David K. Moy

ARTICLE SYNOPSIS ...STATISTICS Oex Options Expiration Trading Patterns by David K. Moy There's a statistically significant bias in the weekly trading of the Standard & Poor's 100 index, in that the week that options expire is noticeably stronger than the week that follows. Statistics that check for significantly different means and ratios can help options traders detect these patterns. Not only that, options expiration patterns can also be useful neural network inputs. Can the tail wag the dog? It can, if the tail is the expiration of Standard & Poor's 100 index options and the dog is the stock market. These...

AUTHOR: David K. MoyDATE: OCT1995

Options Spread Psychology by Steven P. Schinke, Ph.D

ARTICLE SYNOPSIS ...TRADING PSYCHOLOGY Options Spread Psychology by Steven P. Schinke, Ph.D. Choosing an options spread strategy depends in part on individual psychology about market conditions. By understanding how emotions affect behavior, traders can add precision to their options spread positions. Options spread positions are trades that involve the simultaneous purchase and sale of two or more options to exploit differences in price change between them. By initiating such a position, the trader can forecast how the market will move. Implicit in that forecast is the trader's confidence about the directi...

AUTHOR: Steven P. Schinke, Ph.DDATE: OCT1995

Put-Call Ratios by Lawrence G. McMillan

ARTICLE SYNOPSIS ...DERIVATIVES Put-Call Ratios by Lawrence G. McMillan This measure of market sentiment uses options trading volume to measure crowd psychology. Here's one use of the ratio. The ratio of put option volume to call option volume is the major sentiment indicator for listed options. This ratio, called the put-call ratio, is usually computed daily and moving averages are kept. The resulting indicator is a contrary one: when a great many - too many - people are buying calls, for example, then there are a great many -perhaps too many - bulls, and the interpretation as a contrary indicator would be t...

AUTHOR: Lawrence G. McMillanDATE: OCT1995SUBJECT: Derivatives

SIDEBAR: Expectations and Spread Positions

ARTICLE SYNOPSIS ...EXPECTATIONS AND SPREAD POSITIONS For bull market forecasts, graphs in the top half of the article's Figure 3 portray two spread positions. In these positions, the leftmost line on each graph depicts maximum loss as the premium paid for the call debit spread and the difference in strike prices less premium received for the put credit spread. If the price of the underlying issue increases, the loss line first assumes an upward movement as it transverses diagonally to the right and across the zero or breakeven line. The breakeven point for a two-contract call debit spread position is the sum of...