Candlestick Secrets For Profiting in Options Seminar (PDFDrive)

Candlestick Secrets for Profiting in Options Seminar
Nison Candlesticks + Trade Management to Guide Your Option Trading
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Candlestick Candlesticks +
Charting Western
Strategies Indicators
Candlesticks + Trade Management

1
Nison candles & trade management for options
• Break even analysis

• Nison candlesticks for closing out
open trades
• Flexibility with protective stops
• Overcoming low reward to risk trade
set ups
• Using ATM and ITM outrights
• Using bull and bear credit spreads
• Adapting to the Market
• Candles for closing out some of the position
• Rolling up on calls
• Rolling down on puts
• Legging out of bull call and bear put spreads
• Time Stops
www.nisonoptionsacademy.com 2
Break Even Analysis (at expiration)
Long call: Strike price + premium

Long put: Strike price - premium
Bull call (debit) spread: Lower strike + net
debit
Bull put (credit) spread: Higher strike - credit
Bear put (debit) spread: Higher strike - net
debit
Bear call (credit) spread: Lower strike +
credit
Break Even Analysis

Buy put with market at 136.50
Target 130
140 put @6.70 so BE is 133.30
135 put @ 3.9 so BE is 131.1
First support at top of window at

135.
If stops at 135 at expiration 140
put=$5 and 135 put worthless
target
What if analysis- long call
Assume:
$1 strikes
30 day expire
IV 30%
Mkt @ 19.50
Scenario 1- Mkt @ 19.50 and looking for a move to

20.50 in 3 days. What call should we use?
What if analysis
What if analysis- long call

Assumptions:
30 day expire
IV 30%
Mkt @ 19.50
Move to 20.50 in 3 days
Current call premiums:

19 strike - .95
20 strike - .45
21 strike- .20
Theoretical value 3 days later if get to 20.50 (IV constant):

19 strike– 1.65 % return: 74%
20 strike- .95 % return: 111%
21-strike - .45 % return: 125%
What if analysis- long put
Assume:
$1 strikes
30 day expire
IV 30%
Mkt @ 18.00
Scenario 2- market opens here and looking

for a move to 16 in 10 days. Which put do we
use?
What if analysis- long put

Assumptions:
30 day expire
IV 30%
Mkt @ 18.00
Move to 16 in 10 days
Current call premiums:

18 strike - .60
17 strike - .25
16 strike- .05
Theoretical value 10 days later if get to 16.00 (IV constant):

18 strike– 2.00 % return: 233%
17 strike - 1.10 % return: 340%
16 strike -.45 % return: 800%
Nison Candlesticks for Exiting
“I find that the candlesticks are wonderful for

EXITS.”
“I use candlesticks to tell me to get out”
Nison candles for options to enter – and exit
Mkt @ 19 ½. Buy 20 put @ .95
9 days later
Mkt @ 16.50
Close out put @ 3.50
Nison candles for options to enter – and exit
Mkt @ 64
Close out call
@ 4.60
Mkt @ 60
Buy 60 call @ 2.05
Risk Control
Buy stock at 183. Risk
180
You’re at work and by

the time you get back
let’s see what
happened.
Welcome Market now at 160.70.

back from a
hard day at Loss on stock about $19
work
If you bought the 30 day
ATM 180 call @ $5.30
loss on call would be
$5.05. 13
www.nisonoptionsacademy.com
Flexibility with protective stops
Flexibility with stops
Since delta is less than one we

can be more liberal with stops
Long at bullish
engulfing Intra day
fake out

Saw this before – now let’s add falling
window’s resistance at dashed line.
Mkt @ 19 ½. Buy 20 put @ .95

Closed only a few
cents over top of
window
9 days later
Mkt @ 16.50
Close out put @ 3.50
Buy 7-day 350 put @ .15

Can wait for close
over window
Falling window
Mkt @ 310 Close out put at $40 (all intrinsic)
Breakaway
gap. Buy 65
call with
target to 67
based on mid
way gap
Closed slightly
under window, but
With about 40% delta
option let’s us stay
in the trade
19
20
21
Risk/Reward
Buy XYZ at 100
Support at 96
Price target (i.e. resistance) at 108
Risking 4 looking to make 8 gives a 1:2 risk/reward
22
Nison Insider Access - Sample Question
Why I went long:
1) Bullish engulfing at
Bullish engulf
support
2) Trend line breakout

of price
Was this a good trade

that just didn't work out
or did I make a mistake
in judgment that I can't Support
see?
Thank you, What do you say? Did he

Gary B make a mistake? If so what?
23
Using ATM for helping with risk/reward

Mkt @ 397
Target 412
At hammer buy 400
Target call @ 12.25
If mkt was @ 412 (15

Buy pt rally), 400 call @
20.80.
So 20.80-12.25= $8.30
profit
If mkt was 15 pts

lower instead of 15
points higher @ 382
(397-15= 382)
400 call @ $6.13
So 12.25-6.13= $6.12
loss
This slide is from Volume 3 of the Nison Educational Series

 Since the market has to gap higher
this pattern not applicable to FX.
 The higher the market gaps on the
open, and the higher the close on
the white candle the more
meaningful the pattern
 Remember risk/reward since this
pattern is completed after
substantial move has already
occurred.
 Opposite of Bear Sash pattern
 If open of white candle is same (or
higher) as prior open, it is a Bull
Separating Line.
www.candlecharts.com 25
Poor risk/reward?
Decrease leverage
by using ITM
options
26
Poor risk/reward?
Consider credit
spreads
27
28
Credit Spreads and Risk/Reward
Mkt @ 160
Resistance 164-165, Support 155-153
So poor R/R
S165, B170 bear call spread
Credit Spreads and Risk/Reward
At this bull
engulf have
poor R/R.
S1390 /B 1380
bull put spread
Candlesticks +Trade Management for Option Strategies
Adapting to the Market

• Close out partial position
• Legging into a spread to lock in profits
• Legging out of a spread to reverse positions
Candlesticks +Trade Management for Option Strategies – locking in profits on outrights
• With time value working against us, if get a

candlestick signal or market is stabilizing
before target is reached close out some of the
position to lock in profits. Move stop to break
even for the rest.
• If market moves in your favor quickly could

have IV helping outright. Consider closing out
enough to take off risk capital (more true for
puts than calls)
• If reach target and no reversal candle signals

lock in profits and move stops to breakeven
• Can leg into a spread to help protect profits and

battle time decay 32
www.nisonoptionsacademy.com
Candlesticks +Trade Management for Option Strategies – locking in profits
Mkt @ 22.30 you bought 22 ½

puts @ .90 looking for 20.80.
Mkt @ target but no bull candle

signals so lock in profits. Put now
worth 1.80. Take off ½ position.
Now playing with market's money
Long lower shadows at support hint time to
exit (remember time working against us)
Candlesticks +Trade Management for Option Strategies – adapting
close
out call
Buy 55 call,
target at dashed
line
Candlesticks +Trade Management for Option Strategies – adapting
Buy 110 or 100 put
Bull candle signals – getting

nervous about short trade. Lock in
profits and move stop
to break even on rest.
Target Or can leg into a bear put spread
(discussed later)
Adapting by rolling up – calls

Take profits by closing out ITM and
then buying ATM or OTM at same
expiration.
Rolling up with calls

Mkt @ 121 (as soon as
gets over resistance)
Buy 125 call @ 2.50
Closed out Target 129
the rest
Shooting star mkt
@125.50 can close out
Take some call @ 4.50
profits at
shooting star OR
Remember target is
Window minimum, now have small
window as support and
see important resistance
up at 132.
So can roll up and buy to
open 130 call @ 2.30
(same expiration date)
using the $2.00 profit from
prior trade.

5 days later getting nervous. Mkt @ 94 ½
Sell to close 90 call @ 5.70
Use $2.35 profit and
buy 96 call @ $ 2.75 (same expiration)
Mkt @ 90.5
Buy 90 call @ 3.35
Target 97
Near target but want to remain at

least partially long. Sell to close Full exit
out 12 1/2 call and buy 15 call
looking for a move to 15.20 if
breaks out over 13.80.
Target
MKt @
13
Buy 12
½ call
stop
Calls – rolling up on breakout

Mkt @ 34
Now that over resistance our target
is 36.
sell to close 30 call @ $4.10
Profit = $2.20
Buy 35 call @ .75 (same expiration)
Mkt @ 31.40 buy 30 call @ 1.90

Target 33.20
Rolling down with puts
Buy 130 put,

target 127
Close out
125 put
Close out long 130 put.

Buy 125 put (target 123)
Rolling down with puts
Mkt @ 363
Close out 330 put @ 1.50
Mkt @ 355
Target is 328
Buy 340 put @ 5.90
Market stabilizing. Mkt @

344
Close out 340 put @ 9.00
and buy 330 put @ 5.20
(same expiration)
Legging into bull call
Want to stay long due to window.

But shooting star as resistance at 22.5
Sell 22.50 call to leg into bull call spread
(same expiration)
Mkt @ 17.5
Buy 17.5 call
Target 21
Legging into bull call
5 days later mkt at resistance but no bear candles

Mkt @ 446
Leg into bull call by selling 460 call @ 8.30 (same expiration)
Mkt @ 430
Target 450
Buy 30-day 440 call @ 10.50
Legging into bear put
Target 163, mkt @ 169

Buy 165 put @ 3.95
Stabilizing and
Small bull engulf @
168. Sell160 put @ 4.05
So 165/160 bear put
spread @ 4.05.
target
Net credit = .10
If the market does not

act as expected within
five sessions then
consider exiting
46
Candlesticks +Trade Management for Option Strategies – time stops
Bear
Sash
Candlesticks +Trade Management for Option Strategies – time stops
Scenario 1
Mkt @ 85
Target 88.50 in 3 days
Buy 7-day 85 call @ 1.40
Hit time stop: mkt @
85.25 sell to close call @
.90
If reached target in three

days call @ 3.60
157% return
Scenario 2
Mkt @ 85
Target 88.50 in 3 days
Buy 85 call Buy 30-day 85 call @
2.90
Hit time stop: mkt @
84.50 sell to close call @
2.80
If reached target in three

days call @ 4.90
69% return

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Candlestick Secrets for Profiting in Options Seminar

Nison Candlesticks + Trade Management to Guide Your Option Trading

Candlesticks + Trade Management

Nison candles & trade management for options

• Break even analysis

Break Even Analysis (at expiration)

Long call: Strike price + premium

Break Even Analysis

First support at top of window at

What if analysis- long call

Scenario 1- Mkt @ 19.50 and looking for a move to

What if analysis- long call

Current call premiums:

Theoretical value 3 days later if get to 20.50 (IV constant):

What if analysis- long put

Scenario 2- market opens here and looking

What if analysis- long put

Current call premiums:

Theoretical value 10 days later if get to 16.00 (IV constant):

Nison Candlesticks for Exiting

“I find that the candlesticks are wonderful for

“I use candlesticks to tell me to get out”

Nison candles for options to enter – and exit

Mkt @ 19 ½. Buy 20 put @ .95

Nison candles for options to enter – and exit

You’re at work and by

Welcome Market now at 160.70.

Flexibility with protective stops

Flexibility with stops

Since delta is less than one we

Flexibility with protective stops

Mkt @ 19 ½. Buy 20 put @ .95

Flexibility with protective stops

Buy 7-day 350 put @ .15

Mkt @ 310 Close out put at $40 (all intrinsic)

Flexibility with protective stops

Price target (i.e. resistance) at 108

Risking 4 looking to make 8 gives a 1:2 risk/reward

Nison Insider Access - Sample Question

Why I went long:

2) Trend line breakout

Was this a good trade

Thank you, What do you say? Did he

Using ATM for helping with risk/reward

If mkt was @ 412 (15

If mkt was 15 pts

This slide is from Volume 3 of the Nison Educational Series

Credit Spreads and Risk/Reward

Credit Spreads and Risk/Reward

Candlesticks +Trade Management for Option Strategies

Adapting to the Market

Candlesticks +Trade Management for Option Strategies – locking in profits on outrights

• With time value working against us, if get a

• If market moves in your favor quickly could

• If reach target and no reversal candle signals

• Can leg into a spread to help protect profits and

Candlesticks +Trade Management for Option Strategies – locking in profits

Mkt @ 22.30 you bought 22 ½

Mkt @ target but no bull candle

Candlesticks +Trade Management for Option Strategies – adapting

Candlesticks +Trade Management for Option Strategies – adapting

Buy 110 or 100 put