A common stock trading technique is to buy a stock or call option when a stock is at a support position and/or to short a stock or buy a put option when a stock is at a resistance point and exiting the position based on some criteria like percent profit, etc. Generally for this trading strategy, it is desirable to find a stock that is in a trading range or channeling, i.e. transitioning or oscillating between the stock’s support and resistance points.
One way to find or search for channeling stocks is to use Bollinger Bands. A Bollinger Band is a statistical calculation representing a number of standard deviations away from the mean or average stock price. A typical Bollinger Band is calculated using an average stock price based on a 20 day moving average and upper and lower Bollinger Bands calculated based on two standard deviations away from the mean.
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Two other calculations are needed for finding channeling stocks, %Band Width and %Bollinger Band.
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The %Bollinger Band parameter is a search parameter based on the Bollinger Band Width or distance between the upper and lower Bollinger Bands. The %Bollinger Band parameter represents a range between the upper and lower Bollinger Bands. For example a 49% to 51% %Bollinger Band search parameter would find stocks with a stock price located dead center between the upper and lower Bollinger Bands.
The %Band Width parameter is a measure of the width of the Bollinger Bands relative to the stock price’s moving average. A stock with a lot of price movement or volatility would have a large relative %Band Width and a stock with a small amount of price movement or volatility would have a small relative %Band Width.
To find channeling stocks, the %Bollinger Band search parameter can be set to a range in the middle of the upper and lower Bollinger Bands, say 45% to 55% and the %Band Width parameter, for example, can be set to find Bollinger Band Widths of less than 20%.
PowerOptions provides real-time capability to search for stock options positions based on %Bollinger Band and %Band Width for finding potentially lucrative stock option trading positions on stock that are channeling or trading in a range.
For more stock market help about how to identify and research in investing in stock options, stock market portfolios and stock market investment strategies, visit the PowerOptions website. There you will find the data you need to make quick, clear, and informed decisions. You can invest with the confidence that you have the most recent, up-to-date information in covered call strategies and stock investing. Also, PowerOptions will allow you, with a few quick clicks, to quickly and accurately compare stocks. PowerOptions‘ premium customer support is second to none in the industry. They can be easily contacted when you need them at their toll-free number to answer customer questions. Call them now toll free at 877-992-7971.
[tags] channeling stocks, covered call strategies, investing in stock options, poweroptions, stock investing, stock market help, stock market investment strategies, stock option trading, stock options, stock trading [/tags]