Dale Whaeatley was a contractor who traveled the country helping phone companies with their excess needs that they couldn’t handle in-house. As with any type of employment contract, he was inconsistent. She found it difficult to budget his money without knowing what his income or expenses would be. Dale went looking for an alternative source of income. He attended the usual real estate seminars, but realized that he had no real interest in owning or managing a property. Instead, he turned to stocks.
Dale had played the stock market when he was 20 years old, but he didn’t understand it. He decided to educate himself in stock trading. During this process, Dale read how options offered limited risk and unlimited profit potential, a strategy that appealed to him. To know when to trade, he read many technical analysis books and spent over $500 a month on quotes and charts alone. he also drew many graphs by hand. Years later, he discovered a company called AIQ Systems and bought two of their programs, TradingExpert and OptionExpert. Still, all Dale was doing was spending money to no avail. It wasn’t until he sat down and examined his winning and losing trades, comparing them to charts and indicators, that he finally began to discover the value in one indicator in particular, the MACD, known as the Moving Average Convergence Divergence. . He knew that when one line crossed the other it meant buy or sell, but that didn’t work well or consistently, both of which are requirements for trading options as they are a waste of assets. However, by examining the divergences on the MACD indicator, he could tell when a stock was ready to change direction with a high degree of confidence. He focused on perfecting his entry and exit strategy using this indicator, but incorporated multiple indicator time frames, a process Dale had never seen before. Soon Dale’s performances improved dramatically.
Why did Dale choose options instead of trading the stock itself? Options offer incredible potential that stocks can never give us. Plus chart patterns develop clearly enough to see definite directional changes that will produce returns of over 1000% within hours, days or weeks, depending on the strength of the pattern relative to price. Dale’s philosophy is simple, he doesn’t want to “own” anything! He just wants to earn money to do the things he wants, when he wants. Sometimes the chart patterns look so strong that Dale is sometimes limited by the number of contracts he can buy at one time.
The underlying value pattern is of paramount importance in Dale’s trading system. It does not use any pricing model such as the Black-Scholes pricing formula or any other valuation method. These formulas are not designed to help you profit from options, but rather to show what happens if the underlying stock behaves in a certain way. Dale can’t do anything about option prices. Whatever the bid and ask prices are, that’s what you have to pay. It is safety in trading strategy that is paramount.
The pattern Dale is looking for is always the same, but it could be on different time frames (hourly, daily, weekly, monthly, etc.) depending on the time remaining until the option expires and the distance from the next strike price. . What you are looking for is a divergence in the MACD indicator compared to the price of the underlying security. then look to buy call options when a stock tests its previous low but has a positive divergence on its MACD indicator. The opposite is true for cap identification. He uses this pattern because after much experimentation he found it to be the most consistent and accurate.
Here are some great examples of Dale’s trades. LAM Research (LRCX). Lam Research reached an initial low on February 12 and then rebounded. That low was retested from March 1-5. In effect, a double bottom pattern formed. The key to the entry, however, was the positive divergence on the MACD indicator. A similar example can be seen at Nicor Inc. (GAS), the initial bottom came in mid-January, the stock rallied, then retested in March. 5. Once again there was a strong positive divergence on the MACD indicator. March 45 calls were purchased on 07/03/07. Finally, the Freeport-McMoran Copper & Gold (FCX) top formation hit highs in April/May at the same time its MACD indicator was falling. That was a time to buy put options. On a daily chart, this pattern does not always mean major reversals, but in the case of Freeport-McMoran, the weekly chart also had a large negative divergence. Huge downward divergences on multiple time frames are the perfect setup. Options went from $0.20 to $12. Dale made sixty times his money in just one week! Most recently, in May, he entered Advanced Micro Devices (AMD) and General Motors (GM) call options, both of which became 1000% winners in just a few days! Dale believes that he can avoid losing trades with his technique. A losing trade is not the fault of the charts, but of the trader. It really is just a matter of discipline and knowledge along with action when the right pattern appears. If you learn the correct technique and act only when everything is in place, you will always make a profit.
Determining which option Dale buys depends on several factors, such as the price of the stock, how far it is from the strike price, how many days are left until expiration, the cost of the option, and the liquidity of the option. Dale almost always buys short-term out-of-the-money options that expire in the month if the pattern appears on the daily chart. If it appears on a weekly or monthly time frame, you buy out-of-the-money options that could expire several months from now. Dale’s selling technique is simple when momentum turns against the move using the MACD divergence line, you exit the position. .
Dale educates others on the technique in his Options Hunter weekly webinar service, information can be found at http://www.aiqsystems.com/optionshunter.htm. He started teaching others when some investors asked him to explain his trading style and has been talking about his discovery to everyone he knows ever since. Dale has taught people from all over the world, some that he puts on airplanes in the seat next to him and in other casual situations. He enjoys showing people extraordinary possibilities. Dale wishes he had someone to teach him early on how to avoid the pain of investing, but as the saying goes, “The more difficult the conflict, the more glorious the triumph. What we achieve too easily, we esteem too lightly.” “. Dale learned that the divide between rich and poor is because rich people continue to do the things that made them wealthy and poor people continue to do the things that created their poverty. Dale believes that it is a choice each of us makes and wants to help others make the same choices and feel empowered in their own lives. There was a time when he worried that the whole world would “know” if he told them what he did, but after teaching so many people over the years exactly what he does, it still amazes him that only a small number of people apply the strategy. . Dale discovered that he has more to do with people and their preconceived ideas about returns and investing, along with the fear within themselves that actually prevents them from being successful. All people need to take a hard look at their beliefs before they hope to become successful options traders or succeed at anything in life.
The Dale’sOptions Hunter service got off to a fairly slow start because people came from different backgrounds and experience levels. Some were beginners and some experienced. However, over time, those who stayed found many charts without Dale having to hold their hand. One week when the market was starting to change its momentum, many underwriters stepped in with about 15 stocks that looked just right, and the next week some of the options were jumping over 1,000%. There have been traders in the buying call pool at QLGC, HD, CAL, AIG, MM, VLO and the home builders and mortgage related companies (even with all the bad news about subprime loans etc.).
Information about the Options Hunter service can be found at http://www.aiqsystems.com/optionshunter.htm
