In this video, Chuck will explore his simple trend following system for trading options. The goal of the PowerTrend System is to quantitatively measure the price trend of a stock. This enables us to follow the trend instead of trying to predict the trend.
Options are derivatives that derive their value from the price of the underlying stock. Option profits are determined by the price movement of the underlying stock.
If you can identify a stock moving up in price, you can profit from purchasing call options which allow us to harness the leverage options provide. Conversely, if you can identify a stock moving down in price, you can profit from purchasing put options.
We have been using Trend Following successfully for more than 30 years. Our PowerTrend System following system worked well during the 2002 and 2008 bear markets when we profited from short option positions.
In this video, we will learn how to identify stocks moving up in price which are good opportunities for call option purchases.