Stock Option Class

BDCC: Bullish, Day, Continuation, Confirmed

Bullish Stock Trade

  • Focus on stocks that are in a powerful short-term up trend.
  • Look for stocks that have steady (not choppy) upward price movement.
  • The stocks should not have pulled back more than 5% off of their recent high. Ideally, they have been moving side ways and appear to be resting.
  • The stocks should be above their 20-day moving average.
  • Price increases should be accompanied by higher volume.
  • A nice market rally may help propel these stocks higher.
BDCC trade chart

Day or Swing Trade

  • The powerful up trend may lose its steam quickly. Get in, place protective stops and as the stock moves higher, trail the stops higher.
  • If the stock produces nice gains, take partial profits and reduce overnight exposure.
  • Seek small, quick, consistent profits.
  • Exit the trade if the market rallies and the stock does not.
  • Exit the trade if the move does not materialize by the end of the next day, or the stock looks like it is meeting overhead resistance ("heavy").

Continuation

  • Look to join a short-term rally that is in progress. The stock should have good momentum.
  • The search will identify strong stocks that are temporarily moving sideways or have pulled back slightly.
  • Avoid stocks that are trending higher but are very volatile intraday.

Confirmed Option Trading Opportunity

  • The Set-up has formed over the prior day(s) and today the price has moved through a critical price point as determined by the OneOption rule base.
  • The critical price points identify short-term resistance levels. Once the stock passes through them the probability of a successful trade increases.
  • As the resistance level is penetrated, the stocks will often surge higher. Be aggressive but don't chase the stock. If it gets away, there will be others.
  • Be prepared to look at fewer trades. Many potential Set-ups never materialize.
  • Pass on trades that have confirmed on a large gap higher and never pull back.Often, the prior day's price performance will attract attention and create a buy imbalance before you can get in.
  • These stocks are often in "no man's land" and there are no visible signs of resistance because they have rallied so quickly. They may be over extended and may be prone to profit taking. Watch them closely, and take profits along the way.