OEX Trading Rules

Rules for trading the OEX are as follows:

1) Only purchase this month's options - never buy time.

2) Purchase out-of-the-money options for a multi-day play, or in-the-money options if you plan on being in and out of the trade in the same day.

3) Only purchase strike prices ending in zeroes (ex: 600, 610, 620, etc.)

4) Purchase the strike price with the most volume after the open that is one to five strikes out of the money.
As an example, since we only purchase strike prices ending in zeroes: 600, 605, 610, 615, 620 would be 5 strike prices, but we would only consider 600, 610, or 620.

5) Only use the 55 minute or 34 minute charts as the decision chart, and the 8 or 5 minute chart as your action chart.

6) Due to the charts we are using we expect to be in these plays for a matter of minutes, up to a MAXIMUM of 4 days.

There are usually two very opportune areas in each month to play the OEX:

1) The 7 trading days that include the last 4 days of one month and the first 3 trading days of the next month.

2) The 8 trading days leading into expiration Friday.  Though a play could be started on Wednesday (first day of the 8) it is generally preferred to begin plays on Monday (5 days before expiration).

General Notes:

• All plays should be closed by 1:00 PM on Expiration Friday AT THE LATEST.  After 1:00 PM noone cares about options that will expire in 3 hours.

• OEX options move in either direction very quickly - be prepared!

• There can be no "deer in the headlights" in the OEX.  If you become a deer in the headlights, you will be run over by the OEX.