Lunchtime "Caret" Trade on the S&P 500 with Nadex Binary Options

By Sean Jantz, Founder
Binary Trade Group

If your work schedule doesn't permit you to trade during the day, here's a trade that you can make almost every day on your lunch break.

Many traders avoid  trading at lunchtime because there is just not much volume in the market. With Nadex Binary Options, the lunchtime "Caret" Trade allows you to take advantage of declining lunchtime volume on the S&P 500 Futures  market.

Quite often, after a busy morning session, volume on the S&P 500 has a tendency to start declining, usually after 10:00am EST. The market, which has been grinding upward hits resistance, and then starts forming an upside-down "V" pattern. I call it the "Caret" trade because it resembles the "^" symbol above the number 6 on your keyboard.

Click on  Chart to Enlarge

In today's lunchtime trade, the "Caret" trade is in play. The market started moving upward after 10:00am as volume declined. At noon, the market hit resistance on the Keltner Channel and the indicators on the Fisher Transformer were lined up overbought. A reversal Star candle signaled a potential reversal. Sure enough, it happened:

Click on Chart to Enlarge

The market started to reverse with a strong SELL signal on the Fisher transformer. The following order was placed:

Trade Details: 
Contract: US 500 (Mar) >2107.3 (1PM) 
Expiration: Mon Feb 23 13:00:00 EST 2015 
Direction: SELL 
Quantity: 2 
Price: 20.00

Two contracts were being sold, with a maximum risk of $160 and a maximum reward of $40 for this deep in the money trade. Now it's time to see how this trade played out on the Nadex charts:

Click on Chart to Enlarge

Vertical lines were plotted on the Nadex chart (above) denoting the 11am-1pm time frame. As you can see, the 2107.3 strike price chosen was well above the peak of the market, and when the market reversed it was time to kick back and enjoy lunch.

The trade settled in the money for full profit of $40 at 1:00pm, less $3.60 in exchange fees..

About Sean Jantz:

Sean Jantz is Founder of The Binary Group (BTG). He trades mainly Binary Options using the NADEX exchange. Additionally, he makes LIVE Calls on opportunities for members of the BTG private Facebook group on a daily basis, along with other BTG instructors.   BTG provides new and experienced traders with daily training sessions for trading Nadex Binary Options.training, and has helped so many in honing their trading skills.

More information about the Binary Trade Group:

Website: http://www.binarytradegroup.com

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Video: Sean Jantz Breaks Down Today's "Caret" Trade 

The Purpose of this Blog

The Inquisitive Trader will be used  to share my experiences as an investor getting back into trading the markets. In June 2014 I joined the staff at TradingPub, and I am responsible for helping to book speakers for free webinars. Each week, I am exposed to a wealth of information from leading industry experts who teach how to trade the financial markets. When I come across interesting trading strategies, I will summarize my thoughts and share a link to the archived webinar. As I develop my own trading plan, I will also share some of my personal successes and failures. Responsible comments are welcome, but to avoid flaming posts and spam, I will be moderating all comments. I hope you find this blog useful, and wish you the very best on your journey trading the markets.

Disclaimer

The opinions expressed in this blog are solely those of the author, and should not be construed as trading advice. I am not a registered or certified financial planner. There is a very high degree of risk involved in trading. Past results are not indicative of future returns. All individuals affiliated with this site assume no responsibilities for your trading and investment results. The indicators, strategies, columns, articles and all other features are for educational purposes only and should not be construed as investment advice. Information for futures trading observations are obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. Your use of the trading observations is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the information. You must assess the risk of any trade with your broker and make your own independent decisions regarding any securities mentioned herein.