How to Generate Income from Your Stocks

June 4, 2010 // 52 minutes

The Market Guys will show you how you may be able to create income from your stocks with options.

Investing Education Day

July 29, 2010 // Chicago, IL

PIN PRESSURE INDICATOR™

Using Pin Pressure as a leading indicator for setting price targets

AJ Monte, Chief Market Strategist for the Market Guys, has written a paper for the Market Technicians Association on the Topic of Pin Pressure.

This document was grounded in research conducted by the University of Illinois showing how Option Trading Volume affected the price of the underlying stock in which the option contracts where traded.

From this paper, AJ has developed the Pin Pressure Indicator™ which is a calculation that computes the combined open interest traded at various strike prices and uses this data to determine price targets for individual stocks as we approach options expiration Friday.

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0 Book questions

Q:  AJ/Rick,
I’m half way through your lastest book, Five Points. 2 Questions.

The Piercing Point trade says the second day should gap down below the previous days’ LOW. Then, it’s better to be below the Close & Low. Can the first be possible without the second? Did you mean previous days’ CLOSE?            

Do these trading techniques apply to ETFs and Indexes?          - Nick G.

A:  Hi Nick – to your first question – YES! – you are correct!  On page 191, it should state that the open gaps down below the previous day’s CLOSE rather than the LOW.  Again, ideally the gap down will capture both the close and the low, but only the close is required.  Great catch!  To the second question, these techniques do apply equally well to index, sector and industry ETFs.  Be sure to watch for adequate liquidity since many ETFs are so thinly traded that you would likely pass on them as good trade opportunities.  This, of course, is not an issue with the major index ETFs (DIA, SPY and QQQQ).