Good Tuesday, Traders!
Yesterday, we went through the new market call for US small stocks as represented in the Russell 2000 Index futures market (RTY).
And today, we’re taking it up a big notch with the prospect of turbocharging the trading results of the underlying Russell 2000 Index.
This is done by adding the additional gearing or “leverage” of options on futures contracts.
And just as we use options on individual stocks in many of our stock trading services, we are now beginning to use options on futures trades.
To make this work all the better, we’ve brought in an options-on-futures specialist. His name is Jeff Tompkins, and he cut his teeth in the markets working for Morgan Stanley (MS).
He will be working with me to bring the next level of leverage to futures trading in our new product, Weekly Options on Futures Forecast.
To learn more about this brand new service directly from us, click here now!
Now, let’s look at the RTY trade from yesterday with an eye on the options alternative.
Small is Beautiful
We are now seeing some of the biggest trading opportunities for the trading day and potentially for the week in small US stocks.
The small stocks of RTY tend to be outside of global turmoil, including the ongoing Ukraine conflict, and are focused on capitalizing on domestic US economic growth.
This week, we see that our research in the RTY contracts makes it one of our best trade ideas for the day and week.
And as such, we have just posted our idea for global review on TradingView right here!
The Trade Setup
Here’s how we see the chart above for the RTY futures contract setting up the trade idea…
The RTY futures contract one hour time frame is in a large sideways range. The market is at the bottom of the range. The market is below the short term downtrend line. It will be a good idea to wait for the market to break and close above the short term downtrend line before looking for long ideas.
Entry: Counter trend line break-bullish above the bottom of the sideways range.
Stop: In the sell zone, below the low that formed at the bottom of the range.
Limit: 2,055.70, once or if the market closes above the short-term downtrend line.
As long as the market stays above the bottom of the range, it will be a good idea to turn to the five minute time frame and look for Tunnel Trader long / Destination Trader long ideas towards 2,055.70.
Option Alternative
Now, we can do the above trade with the RTY contract, or we can add gearing by using options on futures.
The CME provides calls and puts on its futures contracts just like options are traded on stocks.
All of the similar trading rules and risks apply, including the potential of assignment of the contracts if sold.
And if we are looking at the above trade in the RTY, there are a series of call options that fit into the limit and target pricing for the RTY.
For more on the markets as well as trading education and trading ideas like this one, look for the next edition of Josh’s Daily Direction in your email inbox each and every trading day.
I’ll be bringing you more of my stock and futures contract trading tutorials as well as some additional trading ideas.
And if you know someone who’d love to make this a part of their daily trading routine, send them over to joshsdailydirection.com to get signed up!
Keep On Trading,
P.S. To learn about how options on futures can turbocharge your futures trading potential returns, my colleague Jeff Tompkins and I have put together a new service called Weekly Options on Futures Forecast!
To learn more, click here now!
The post How to Turbocharge Your Futures Wins appeared first on Josh Daily Direction.
