Unpredictable events such as news, rumors and earnings reports fluctuate the price and volume for individual stocks. We reduce the uncertainty by dealing with multiple options contracts in their aggregate, and by tailoring our indicators to process Nasdaq 100 and S&P 500 index derivatives options. The volatility of any options contracts in our indicators is diluted by addressing them as a group.
The main advantages of the index trading over the stock trading are:
The biggest advantage of the index trading is that index analysis is simpler than the stock analysis. By trading indexes you may skip many aspects of fundamental analysis. The companies that manage indexes (Nasdaq and Standard & Poors for Nasdaq 100 and S&P 500) do it for you. They analyze an index's constituents and they remove weak stocks by replacing them with strong stocks.
For our trading systems we selected QQQ and SPY - Exchange Traded Funds that track the Nasdaq 100 and S&P 500 indexes. By using our systems you will be investing into indexes. The main reasons we selected to trade indexes is that in opposite to stocks we will not get caught by unexpected news or a company report, plus, we may skip fundamental analysis and completely focus on the technical analysis of indexes. Potential profit from index trading could be smaller when compared to a potential reward that could be received from stock trading. However, index trading may deliver the stability and over time bring higher profit to investors.
Naked options trading is very risky - many people lose money trading them. It is recommended contacting your broker or investment professional to find out about trading risk and margin requirements before getting involved into trading uncovered options.