Trading Weekly Options: FAS Directional Analysis

FAS Weekly Options Trade Analysis (9-18-2011)

The investment seeks daily investment results, before fees and expenses, of 300% of the price performance of the Russell 1000® Financial Services Index. The fund will invest at least 80% of assets in securities that comprise the index. It will also utilize financial instruments that, in combination, provide leveraged and unleveraged exposure to the index. The fund is non-diversified.

 
Trade Recommendations—if you are trading weekly options with FAS we maintain keeping a bearish option strategy in place. There may be an opportunity to look for money making opportunities on both ends soon, but these signs are weak at the most. Since the bands have been tight, the options are trading tight. This means there is not a whole lot of movement and room for mistakes. Trade your weekly options bearishly still but this week we may still see a couple bullish days before we turn bearish again.

Bollinger Bands—FAS has been moving steadily down for the last 6 months. It has been steady and consistent and this is why we can see the bands moving along so closely together. Except for the one drop we had in the markets in August, FAS has been steady and somewhat predictable. We are still moving down in a bouncing pattern and we still have room to move up a bit before we continue our downward bounce.

RSI—since FAS have that deep plunge in the markets, we have seen the development of a positive divergence. Our lows appear to be getting higher and we see our highs becoming steady but not really moving up. When we look for a positive divergence, we also want to see the highs getting higher. Since we do not have the higher highs like we like, we would say that we have signs of the bearish trend slowing, but it is a weak sign at best. 

MACD— the FAS has more pronounced signs of a positive divergence here. This is especially true in the MACD Histogram. Just now have we rested upon the ‘0’ marker we have been positive while the stock was dropping. Trading weekly options, one would watch for a change of direction. Maybe the best we can see is a sideways movement and no more downward trends. This would allow us to trade in either direction with a weekly option strategy. 

Chart—FAS is consistently moving down. One would choose a bearish weekly option strategy just by looking at the charts. We are steady and since we have been predictable we do not expect a huge change to take place in the chart. Possibly bearish to sideways in the future, but this is even week.

John Mylant is CEO of EmpoweredInvestingNow.com. He is in high demand as an Investment Trainer. Coaching traders all over the world how to grow their portfolio, he uses Option Strategies that are safe, conservative, and allows for quick steady growth with limited liability. Interested in successfully growing your portfolio using options—safely, efficiently, and quickly? Trade Weekly Options now....

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