Trade Dissection June 9th

Trade Dissection June 9th

Last week we took a look at some trader fantasies and what we wish we knew. So let’s expound about that and dissect a trade with the information we do know. Specifically the opening print for the day!

Trade Dissection June 9th
Trade Dissection June 9th Getty Images

The day is June 9th 2016 and the E-mini S&P Future, (ES) opens at 2109.50.  Which in my opinion marks a very important level on the day right?  It essentially decides whether the day closes red or green disregarding the previous days close.  At the same time it gives an opportunity for shorter term expiration options if a setup allows, and that is exactly the trade dissection I want to break down.

 

If we take a look at the chart example below what we have is the ES with a smaller 2 minute chart of the E-mini Russell 2000 Future, (TF).  With trading we are always looking for an edge or something that can potentially set us apart, and having a keen eye for detail can play an important role in that.  So this strategy I am about to reveal unless you have already glanced and picked up on it requires that attention to detail.

Trade Dissection June 9th

 

In the screenshot above what stood out to me was at about 9:45 EST the TF made new lows while the ES did not and just hovered around its opening print of 2109.50.  This minor divergence just 15 minutes into the day can lead to opportunity and I would like to show you 1 potential way to play it.

Trade Dissection June 9th

 

Step 1 is choosing your strike with a simple yes or no thought process in mind.  In this example I went with the 2109.3 10 AM expiration.  As you can see from the order ticket it clearly defines your ‘Max loss’ & ‘Max profit’ based on whatever price you are looking to pay/sell.  The trade was purchased at 48 as you can see from the  open position screen shot below. Having this information handy can take out any psychological confusion or overwhelming emotions attached to the trade.  After this has been determined and executed it really comes back around to that yes or no question come expiration time. 

The order ticket displayed shows that there is 4 minutes & 38 seconds prior to expiration where the market is 95 bid/ no offer. As you can see from the detail, buying 5 contracts at 48 would cost $240 to make a profit of $260 if the binary finishes in the money at expiration. This trade worked out well today but you don’t have to wait until expiration where you can offset your trade early to take an early profit or cut your losses.

Trade Dissection June 9th

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