candlestick secrets for profiting in options seminar3+module… · · 2011-10-27candlestick...

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Candlestick Secrets for Profiting in Options SeminarNison Candlesticks to Guide Your Option Trades

“I was long a stock and saw bearish candles so I bought aput to protect my position.”

“Being able to employ some defensive timing measuresREALLY reduces my anxiety”

“The candles provide the final piece before I initiate adefensive call/put position – the gun is loaded and primed,but candles provide the spark for detonation. NO SIGNAL-NO ACTION”

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How can I boost or preserve profitseven when my core markets are falling?

Nison Candlesticks for Portfolio Protection

Use Nison candlesticks for pinpoint timing entering and exitingcovered calls and protective puts

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© Steve Nison’s Candlecharts.com




Examples of when to protect portfolio:

• Bearish candlestick

• Bearish westernindicator

• At resistance(especially withbear candlestick)

• Falling off the roof

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Covered call: Selling (orwriting) calls while at the sametime owning an equivalentnumber of shares of theunderlying instrument.

Protective Put: Buying putswhile holding shares of theunderlying stock.

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Remember:

If you arescaredabout amajor move-exit theposition!

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What defines a trend?

• Higher highs and higher lows

• Chart of higher degree

• Price above a moving average

• Dual moving averages – and use golden anddead crosses

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Overview: Covered calls compared to long puts

Puts when:

• IV is not too high compared to what is “normal”

• Don’t want to worry about being called away by using a covered call.

• Worried about a big move where call premium for a covered is notenough protection

• Pure insurance

Covered calls when:

• Income generation

• Expect choppy market

• IV is overextended

• Time decay in your favor

• High price market makes longs puts too expensive

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Nison Candle strategies for portfolio protection

Long this market and want to buy a putHow much protection do you want?Deeper ITM more expensive, but higher deltaOTM may not help much, due to lower deltaATM – have 50% delta which gets larger as optionsbecomes more ITM.Note: Can get 100% delta by doing 2 ATM puts.

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Nison Candle Strategies for portfolio protection

Use the precisiontiming of Nisoncandles to helpavoid giving up profitpotential by doing acovered call orprotective putprematurely.

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Have SP in retirementaccount. Worried about amove to 126.Mkt @ 138

Buy a 30–day 135 put @ 3.30Cover at support at 126 put @$10Paper lose on mkt of $1200on 100 shares and made$670 on protective put


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I owned GS. I bought 5Sept 160 puts to covermy 500 shares of GSwhen the stock was at168. The put cost me5.30.

In 10 days the stock wasat 158, a paper loss of$5000. The put gained$1500.

Support area


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Initiate long put or covered call

Exit protection (may want togivea few sessions due topossibilityof Falling Off the Roof pattern)

Candle pattern (such as doji)as resistance

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Doji atresistance

What are tworeasons to exitprotection?


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Reversal candle

Western support area or bull candleclosed out short calls or long puts

(how many depends on confidence level(i.e. strict candle criteria, westernconfirmation)


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Looking for temporary move to 31.50Mkt @ 33.25 buy 32.5 put @ .80Reached target but no reversal signals (worth 1.60)So ride it down to 30.50 until at bull engulf put @ 2.25.


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You’re long 100 shares of the market,Nison Candle Scanner alerts you to bearengulf @625.

Worried next support starts at top of windownear $590.With market @ 625 sell 630 call @19.20

At morning star call mkt @ 595. Close call @6.00 = $1,325 profit on call (but did have apaper loss of $3500 on your market)

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candlestick secrets for profiting in options seminar3+module… · · 2011-10-27candlestick...

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