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Strategies & Market Trends : Tech Stock Options
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To: Kevin who wrote (27877)11/5/1997 2:30:00 PM
From: Brad Hill  Read Replies (1) of 58727
 
Kevin--In one way, you may think that it's better to take a smaller
position when the points are in a tighter range. You might do this because you fear that there's too many supports or resistances to break in order to get a strong move to profit off of. But on the other hand, you may take a larger position to make it a hit and run (a 5 point move in the SPX should generate approx a 10% move in close-to-the money options which isn't bad for a quickie).

My thoughts exactly. My inclination would be to take a larger position and get out faster. Or take no position at all, like today <g>.

Starting next week when I have some time I may take your formula and do some back testing on this question. Another question that interests me: how the day's closing numbers, in the context of your supp/res scenario, affect the next day's action. In other words, whether the day's supp/res numbers carry over to the next day. Example: if the SPX closing pierces a resistance level, should that be bullish the next day, if supported by the futures? Knowing that would help clarify the question of when to hold positions overnight. Discovering relationship between the current and previous day's support and resistance levels might also help smooth out the question of varying degress of volatility.

OK, back to work <g>.

-- Brad
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