How to Cash in on a Breakout (or Breakdown)

As I showed you last week, stocks (and other underlying securities) can often trade between support and resistance for sustained periods of time. When this happens, the underlying is said to be in a channel. Channels are helpful tools for traders because they allow you to predict how a stock will behave, and pick your options accordingly.

While channels can and do last for weeks and months at a time, all stocks, ETFs, futures, and commodities will eventually break out of a given channel.

But how do you know when an underlying is about to break out?

And – more importantly – how can you profit?

To continue reading click here

This Skill Is Essential for Pinpointing Your Options Trades

On Tuesday, we talked about “Channeling,” and I told you how you can use a stock’s Support and Resistance levels to identify channels and better predict how a stock’s price will behave.

To illustrate the point, I used a horizontal channel – that is, a stock that’s trending sideways. It’s the easiest type of channel to identify and trade because you don’t have to account for a stock that’s trending up or down. So it was the perfect way to explain the basics.

But now it’s time to tackle something a bit more advanced.

We’re going to dig a bit deeper into channels today – there’s a lot that you need to know in order to wield this technique effectively.

So let’s get started…

To continue reading click here

View this page online: