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Strategies & Market Trends : Buying In the Money Options
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To: the options strategist who wrote (17)10/16/2000 11:12:18 PM
From: High Grader  Read Replies (2) of 21
 
The low on 10/11 was 19 1/8 = 19.125.
Action below that should not happen, if the EW count is right, until the fourth wave rally is over.

I am thinking that 19.125 is the wave 3 of wave C, bottom pivot. If I am right we can expect a rally with wave 4 up then wave 5 down after 4 has reached the Fibonacci ratio targets.

If I am wrong the market will tell me by dropping below 19.125. Exit fast if the price drops through 19.125.
Penetration of 19.125 without a rally would say I was wrong in my count and no spread zone trade is going to materialize. At that point you salvage as quick as you can. Sometimes you even make a profit while doing salvage, as spreads can be perverse and may go up even as the market moves against them

It all depends on having the correct EW count, which is a tricky business. I use ElWave software to do this and when I get it all right and find a good spread zone, it works really well.

I will see if I can find another one if this one fizzles.
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