This week's video Chuck Hughes will explore the PowerTrend System for selecting option trades.
Step 1 of the trade selection process is to check the stock price in relation to the 10-Month SMA to determine if the stock is on a PowerTrend 'Buy' signal.
Step 2 is to check to see if the stock is trading in the Keltner Channel 'Buy Zone' which can result in a low risk entry point.
The chart below for Travelers Insurance displays the daily price movement of TRV stock and the Keltner Channels. The Keltner Channel 'Buy Zones' are circled. Recently TRV traded in the Keltner Channel 'Buy Zone' eight times which set up low risk entries as the stock rallied after trading in the Buy Zone. Learn how this two step process can help you select option trades with good profit potential.