When the Trend Line Crosses the 200 EMA

When a trend line crosses the 200-day Exponential Moving Average (EMA), it can indicate a significant shift in the market or stock's trend. The 200-day EMA is a widely used technical indicator that helps identify the overall direction and strength of a trend.

Here are a few possible interpretations when a trend line crosses the 200-day EMA:

1. Bullish Signal: If a rising trend line crosses above the 200-day EMA, it suggests a bullish signal. This indicates that the price has gained enough momentum to break through the long-term average and may continue to rise.

2. Bearish Signal: Conversely, if a falling trend line crosses below the 200-day EMA, it signals a bearish trend. This suggests that the price has lost support and could potentially decline further.

3. Trend Reversal: A trend line crossing the 200-day EMA could signify a trend reversal. For example, if an uptrend line crosses below the 200-day EMA, it might indicate a shift from a bullish to a bearish trend, and vice versa.

It's important to note that no single indicator should be used in isolation to make trading decisions. Traders and investors typically use multiple technical indicators and analyze other factors such as volume, support and resistance levels, and fundamental analysis to confirm and strengthen their conclusions.

Lastly, interpretations can vary depending on the specific chart, timeframe, and market being analyzed. Therefore, it's essential to consider these factors and apply appropriate risk management strategies when making trading decisions.

What does Implied Volatility mean on a Call Option

Implied volatility is a measure of the market's expectation of the future volatility of the underlying asset, based on the prices of options contracts. In the context of a call option, implied volatility refers to the level of expected volatility that is implied by the market price of the option.

A call option gives the holder the right, but not the obligation, to buy the underlying asset at a predetermined price (the strike price) on or before a specific date (the expiration date). The value of a call option is influenced by several factors, including the price of the underlying asset, the strike price, the time until expiration, and the implied volatility.

Implied volatility represents the market's perception of the likelihood of significant price movements in the underlying asset over the life of the option. A higher implied volatility implies a greater expected range of price movement and therefore a higher likelihood of the option reaching the strike price before expiration. As a result, a higher implied volatility generally leads to a higher price for the call option. Conversely, a lower implied volatility implies a lower expected range of price movement and therefore a lower likelihood of the option reaching the strike price, resulting in a lower price for the option.

Buying Calls that expire the same day

There is a lot of money to be made in buying calls that expire the same day.

THE THEORY:

Buying a call option that expires the same day can potentially provide benefits such as:

1. Lower cost: Options that expire on the same day typically have lower premiums, or the price that an investor pays to purchase the option, compared to options with longer expirations. This can make it more affordable for investors to speculate on short-term price movements.

2. Quick profits: If the underlying asset's price moves in the desired direction, the value of the call option can increase rapidly. This can allow investors to make quick profits in a short amount of time.

3. Limited risk: When buying a call option, the maximum loss that an investor can incur is limited to the premium paid for the option. This means that investors have limited risk exposure compared to buying the underlying asset outright.

THE STRATEGY:

So with that information out the way i am going to show you how i made 20% on TSLA using a particular strategy. The was done today May 5th 2023 and while it is risky I will show you all the tools and resources I used to pull this off.

1. I use different resources to identify a Call on TSLA that expired today to get my strike price and check the volume. I want a 4 digit volume or better.  This only works on stocks that are very volatile so TSLA is perfect. See My previous post.

2. I then use the 15 minute chart on Trading View to check for an upward trend and draw my line to the anticipated price mark.

3. I then find and buy the call on Robinhood and check to make sure the Greeks are looking good.

4. I set my alert for the price mark and I get out once it hits the mark. 

5. I try to stick with My 20% profit rule and not get greedy. 

For stocks like TSLA this works on a Friday but others like SPY have more than one expiration day for the week.

THE RESULTS:

THE CONCLUSION:

However, it's important to note that buying options with very short expirations can be risky and speculative. Options with short expirations are more sensitive to changes in the underlying asset's price and can quickly lose value if the price doesn't move in the desired direction. Therefore, buying a call option that expires the same day is generally considered to be a high-risk, high-reward strategy that should only be used by experienced traders who can manage the risks involved.

What is Dollar Cost Averaging and why it works for investing

Dollar cost averaging (DCA) is an investment strategy in which an investor divides their total investment amount into smaller, regular investments made over a period of time. For example, instead of investing $10,000 in a single lump sum, an investor might choose to invest $1,000 each month for ten months.

DCA works because it allows investors to average out the cost of their investments over time, reducing the impact of short-term market fluctuations. When prices are high, the investor will buy fewer shares with each installment, but when prices are low, the investor will be able to buy more shares with each installment.

By investing a fixed amount of money at regular intervals, the investor is less susceptible to the emotional decision-making that often leads to buying high and selling low. Instead, they are able to take advantage of the market's natural ups and downs without trying to time the market.

Over the long term, DCA can potentially lead to lower average purchase prices and higher returns than if an investor had made a single lump sum investment. However, it's important to note that DCA doesn't guarantee profits or protect against losses, and investors should carefully consider their goals and risk tolerance before implementing any investment strategy.