The SPY 10AM Weekly

by Jeff on August 1, 2010

I want to introduce you to a simple, high probability weekly SPY options trading methodology. It’s so easy I even recommend the time of day to make your analysis and place the trade. That’s it – just a few minutes each day at 10am and then you are out and free to go play golf, play with your kids/grandkids or look for a real job – if you really want to.

Basically, it’s using a proprietary indicator called Person Pivot Points available on thinkorswim’s platform via TD Ameritrade’s charts, Price Action and delta (option Greek). All the details are in the new video posted on the right called “SPY 10AM Weekly” under New Downloads.

Sounds too good to be true? Maybe it is, but the video will show you, using the OnDemand feature of the TOS platform, that it was 100% successful 5 weeks in a row from 6/23 to 7/20 – all in HD quality and Dolby stereo.

(OnDemand is a thinkorswim’s proprietary feature that provides the ability to play back any trading day, in real time or fast forward, tic-by-tic, on any stock, ETF, option, future and currency pairs on any day from 12/7/09 to 7/24/10. Yes, it allows you to trade any of these as if you are there at that date and time. You can watch a 5 minute demo here: OnDemand Demo)

At TOS you need $3,500 to open a new account. That’s all you need to trade this strategy, although you should make sure that you can afford to lose that amount, since nothing is guaranteed. You never have more than $1,800 at risk at any one time – if this is all the trading you do in this account. But don’t take my word for it. Just open a regular account at TOS (you can even do this in an IRA – I do). If you already have one – great. Watch the video and switch to OnDemand and practice, practice, practice until you prove to yourself that it really can be done.

July Results

By the way, my monthly results have been updated. It’s not as bad as I thought a week ago.

I entered into a single calendar on AAPL on 7/19 using the normal August expiration (8/20) as my back month and I am rolling the short front month each week (details at left). Follow along as I roll from week-to-week – I have 3 weeks left. So far, I think this will make money as long as AAPL doesn’t go bearish on me (should I buy a protective Put?).

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As always, feel free to email or comment.

Jeff

  • http://theoptionguru.com/blog Jeff W

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  • Tom

    Jeff, rnrnNo I didn’t start with $100. I actually started with a little of $97,000. I normalized this to a starting point of $100 so I could compare it daily with the SPX index, PHP & BXM, all having been normalized to a starting point of $100 as well. The resulting daily chart of BRHF, SPX, PHP & BXM all starting at $100 shows the relative performance between them. Of course BRHF (My Covered Call portfilio) out performed the others. More importantly it visually shows how CC’s outperform in down markets while underperforming in up markets. I can sen you the spreadsheet if you like. rnrnrnTom Clark

  • http://theoptionguru.com/blog Jeff W

    Tom,nnThanks for your insight and encouragement.nnI dabble a bit in day-trading the Russell Futures using Person Pivots on a 5-minute chart. I see the arrows appear and disappear, depending on the action of the price for that bar while it is still forming. However, I have never seen one appear/disappear after the 5-minute bar is completed. So you’re right, if the arrow is there in the AM it may not be there in the PM.nnYou’re also right about the limited number of strikes, but since we are working with only a few days in a trade, chances are the ones we are concerned about will still be there. Besides, it is just a virtual trading world, right?nnI visited your web site to check out BRHF – very interesting. Did you really start out with $100? How do you do CC’s with that small amount? Have you checked out my data of my Conservative Account?nnu25c4 Jeff u25ba

  • Tom

    Jeff, rnrnThanks so much for putting together this video on trading the SPY weeklys! Iu2019ve now spent more hours than I wish to admit buried deep in OnDemand. Kind of like Peabodyu2019s Way Back Machine. Iu2019ve duplicated your trades using a couple other ETFu2019s just to get the hang of things. A couple of notes. 1) The Person pivots on the 10:00am bar may or may not be there at the end of day. The daily bar, now only a half hour long, is treated as a full day in the calculations. Wait until the next day to declare the pivot point valid. 2) It seems that TOS only captures data for a limited number of strikes around the ATM point. If the market moves while you are in a simulated position your option could drop off the quote screen in which case everything uses the last price. Something to watch out for.rnrnIu2019ve been enjoying you blog, keep of the good works.rnrnTom Clarkrn

  • http://theoptionguru.com/blog Jeff W

    I’m not sure who Don is so I don’t know which comment you are replying to. Add to that I am a bit confused by your comment – I think you mean SPX and not SPY, as I pointed out in an earlier comment.nnu25c4 Jeff u25ba

  • http://theoptionguru.com/blog Jeff W

    I'm not sure who Don is so I don't know which comment you are replying to. Add to that I am a bit confused by your comment – I think you mean SPX and not SPY, as I pointed out in an earlier comment.

    ◄ Jeff ►

  • CLE

    Hi Don,
    Great video and great ideas. Just want to remind people t that SPY doesn't trade on exp Friday (for weeklys or monthlys). The closing price however is based on the Friday open, so if you hold it over Thurs night, you can't do anything to get out even if something strange happens and your short out of the money ends up in the money. I didn't realize this little sublety until I had been trading Spy for months, but luckily it never got me in trouble.

  • http://theoptionguru.com/blog Jeff W

    Mike,

    I suppose I could, but I wanted to make the strategy more universal and understandable to a larger universe of readers. The SPX options are European-style and thus behave a bit differently than the more common US-style; they expire on Thursday and the expiration price isn't determined until after the open on Friday. Another advantage of SPY over SPX is volume – this gives a tighter bid/ask spread. Also, but not that important, is the $25 spread on the strike prices.

    I used to trade the SPX and OEX but stopped when I was profitable at market close one Thursday, but lost when the market gaped on Friday morning. Yes, I should have closed on Thursday and not received the max profit, but greed got to me and I went to bed Thursday night fat and happy only to have my jaw drop on Friday.

    ◄ Jeff ►

  • Mike

    Jeff
    What about trading SPX weekly options instead of SPY options. One contract of the SPX would equal ten of the SPY so you could trade two SPX instead of 20 SPY contracts and save on commision. What do you think?

  • http://theoptionguru.com/blog Jeff W

    Mike,

    It's too bad that none of the trades went bad, but you have a good question. Since these are only alive of 5 days or less, when you log in at 10 AM and your short is ITM, just exit and take your loss. Chances are it will not be at the max and you can recover on future trades – or maybe you are already way ahead.

    There are some strategies that suggest rolling to the next month or the next nearest OTM strike, but the doesn't eliminate risk when you just take the loss – it only extends it.

    ◄ Jeff ►

  • Mike

    Jeff
    I'm new to your site and I'm liking it. My question on this system is if you are wrong you are not giving yourself time for any adjustments. How would you handle if the move goes against you?

  • http://theoptionguru.com/blog Jeff W

    Martin,

    Yes, I love Don's videos too. He's really fast and enthusiastic. Just picture Trading as a Business as Don on steroids and actual methods and trades. Don, as is proper, doesn't explain trading strategy – just software capabilities.

    ◄ Jeff ►

  • MartinGS

    Along the same lines as “Trading as a Business”, Don Kaufman presented “Building and Managing Inventory”. All of Don's chats are great, but this one maybe the best.

    https://www.thinkorswim.com/tos/displayPage.tos

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