A note on Index trades
I know that you have some Index Puts so this is how the Darvas box could be viewed for the INDU. If looking Long Term the first Box would have a top at the 8050 resistance level and a bottom at the 7900 level. The quick gap down on Friday could have been ignored as there really was not a time when 7900 clearly became resistance. If using the bottom of the box as Support to go Long from and the top of the box to go Short from you could have exited any Long position on the failure of a breakout and gone Short at the top of the box with a stop loss set at 8050. Once the bottom support of the box was broken at 7900 you can clearly see that 7900 became Resistance. This was the top of the new box and could have been used to add to the Short and you would use a breakout above 7900 as your stop loss. If deciding to hold your trade Long term you could continue to use 7900 as your stop loss order and add to the Short whenever the New support levels are broken and become resistance. If looking to protect your current gains you could move your stop loss order to 7800, the top of the short term box as it is resistance. The short term box would be 7800 top and 7725 bottom. The long term box would be 7900 top and 7725 bottom. Depending on the timeframe you are looking at and how tightly you want to set a stop you would adjust your order to fit your Box. Can you also see how using the SMAs help in determining the type of trade you want to be in? Above the SMAs you are holding Calls and Below the SMAs you are holding Puts. The same theories of whether support or resistance are Holding apply.
Good Trading Steve! :^)
I know that you have some Index Puts so this is how the Darvas box could be viewed for the INDU. If looking Long Term the first Box would have a top at the 8050 resistance level and a bottom at the 7900 level. The quick gap down on Friday could have been ignored as there really was not a time when 7900 clearly became resistance. If using the bottom of the box as Support to go Long from and the top of the box to go Short from you could have exited any Long position on the failure of a breakout and gone Short at the top of the box with a stop loss set at 8050. Once the bottom support of the box was broken at 7900 you can clearly see that 7900 became Resistance. This was the top of the new box and could have been used to add to the Short and you would use a breakout above 7900 as your stop loss. If deciding to hold your trade Long term you could continue to use 7900 as your stop loss order and add to the Short whenever the New support levels are broken and become resistance. If looking to protect your current gains you could move your stop loss order to 7800, the top of the short term box as it is resistance. The short term box would be 7800 top and 7725 bottom. The long term box would be 7900 top and 7725 bottom. Depending on the timeframe you are looking at and how tightly you want to set a stop you would adjust your order to fit your Box. Can you also see how using the SMAs help in determining the type of trade you want to be in? Above the SMAs you are holding Calls and Below the SMAs you are holding Puts. The same theories of whether support or resistance are Holding apply.
Good Trading Steve! :^)
Good Luck to All! :^)
PLAN the TRADE and TRADE the PLAN!
Join the InvestorsHub Community
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
