Invest and Trade Profitably with Jon Johnson

Education Center

Looking at downside play 6/7 for AMX please explain how you figure a 40%ish gain on a 3 point drop of a 55$ stock?

August 30, 2000

The play is with put options going long versus shorting the stock. Using these options we get much better leverage on the same downside move than just shorting the stock. This way we can take advantage of individual legs lower in a stock’s decline, limiting our time exposure in the market and leverage our returns […]

A trade example for taking profits.

August 30, 2000

We have a few main rules in our trading and investing. First, take what the market gives; don’t try to make things happen that are not there, don’t try to fight the market. If it is giving you upside, take it. Second, follow the leaders. Figure out where the money is going (the market tells […]

I am a new member of the Daily. I am trying to determine when to buy (get in) on recomended stocks. On 11/9 part 3 of the daily recomended stocks biib, bj, cost, and dri. The buy point for the stocks were 63.02, 43.03, 64.22 and 47.56. The next day all four stocks moved above the buy point levels and you didn’t buy them. Why? please explain and give me a workable formula to determine when I should trigger my buys.

August 30, 2000

Appreciate you becoming a member of the Daily. Below are explanations of why and when we entered or did not enter the specific plays in your email and then a more general explanation of entering the plays on the report. Please keep in mind that whether we enter or not is based upon our traders […]

Do you have any specific advice for negotiating the huge spreads these mm’s are placing on option strike prices? I’m only trading 4-5 calls at a time and I’m reluctant to pay the whole spread on some of these plays. However, I’m not getting filled half the time. Is there any specific technique you use?

August 30, 2000

With respect to large option spreads we note in the nightly report and in the alert if it is a spread that is too wide to realistically make money on. That is usually because of poor liquidity and thus the market maker plays with the spread to insure his book. When that happens we typically […]

What’s your normal ratio of correct calls? Do you typically hit about half correctly? 3 of 4? I’m trying to manage stop losses and there seem to be an awful lot of them in this, my first month with you. If this is typical, please let me know what ratio you are used to, so I can manage my risk accordingly.

August 30, 2000

There are many stop losses of late for obvious reasons as the market turned choppy as the nearer term trend broke and the breakout tries from the inverted head and shoulders could not hold. We like to keep playing setups that show themselves even at those times because the market can continue on and if […]

As per any entry you list volume and price requirements. What happens if price hits but volume doesn’t? Or what happens if doing put and price hits in morning and keeps heading lower buy volume hits at end of day and I have missed the move down during the day?

August 30, 2000

First off, your questions make perfect sense. While we always love an ideal entry with the volume and price targets matching up, that is rarely the case. So what are we left with? Making the best of what we get. This is especially true considering the market we are dealing with right now. Gone (at […]

You mentioned the “January effect” in [a recent] report and I’ve heard the term before, but never an explanation of what it entails and what is the (historical/financial/trading?) basis for same.

August 30, 2000

We mentioned the January effect in the December 22nd report as a positive sign resulting from the action of many stocks we have seen of late (stocks making strong moves off of the bottom of their bases and currently forming the right sides to these bases). The January effect refers to the general tendency of […]

In your comments on a prior play you said your favorite entry point is the test of the breakout. What are you looking at as the breakout and the test?

August 30, 2000

A test of the breakout often occurs after a stock breaks out of a consolidation or base and moves higher: once the initial move higher peaks, the stock “takes a rest” ideally by coming back to test some short term support such as the 10 or 18 day exponential moving average (this “rest” is actually […]

I’ve heard a lot of talk about the Phillip’s Curve and its so called accuracy. Would you please share your thoughts on its performance and accuracy as to the market’s present and future activity?

August 30, 2000

The Phillips Curve is an economic theory that is avidly followed by some and equally disdained by others. Basically it is the ‘speed limit’ theory describing economic activity in relation to inflation. In general, the ‘Curvers’ believe that there is a limit to the level of growth that can be sustained without inflation. Too much […]

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