The last few days were reminiscent of March— when the markets were at peak volatility…

And it makes me wonder…

Are these last few days possibly key parts of a reversal…

Before the market soars back to all time highs?

There are plenty of other questions to answer…which I will try to get to all…

But in times like this…

I rely on one indicator—fractal energy. 


Options Profit Planner


Fractal Energy is considered the most powerful mathematical equation that is used to solve the unsolvable.  Fractals are used in defining coastal patterns and snowflake designs.  

A fractal is a never-ending pattern. Fractals are infinitely complex patterns that are self-similar across different scales. They are created by repeating a simple process over and over in an ongoing loop. 

When searching for ways to tap into the inner workings of the stock market, I knew right away Fractal Energy would do the job!


Fractal Energy Indicator


The power of fractals allows me to determine the strength of trends and how much “life” is remaining in a stock’s movement.  

And I must say, there are some ominous signs coming out of the fractal indicator. 

But first, there are 2 main components of Fractal Energy that you need to know.

Two components:

  1. Markets Fractal Pattern
  2. The Internal Energy 

Fractals are found throughout everything in nature, from plants to shorelines… and even the financial markets!

Energy is the term used to describe the stored or potential energy a stock has built up.  Like a spring that is compressed, it stores potential energy and erupts when you release the force that is keeping it held together.

And by combining those two different components you create a single indicator that is able to successfully determine the strength or weakness of a trend on any stock.

Fractals tap into the inner strength of every stock across every time frame giving you the most comprehensive understanding of what a stock is going to do in the future

Now let’s take a look at the SPY and see what Fractal Energy had to say about the price move over the last week.  


Source: TradingView


How should I trade this?

Let’s take a look at a way you could do this safely without going naked short calls.


Selling Options and Credit Spreads


In order to get long or short the markets, a trader is left with only a handful of choices, and those are selling stock or buying puts.

And to be honest, both are usually a terrible idea and there are times when you could be right on the direction and still lose on the trade because of other factors such as Implied Volatility decreasing the price of the stock on you.  

One strategy you might not have heard of is a credit call spread, and that’s the trade we are going to focus on when looking to short the stock.

Definition: A credit spread, or net credit spread is an options strategy that involves a purchase of one option and a sale of another option in the same class and expiration but different strike prices. It is designed to make a profit when the spreads between the two options narrows.

Simply put – a credit spread strategy will make you money, while a debit spread strategy will cost you money.  

This is the house vs the gambler.

And at Options Profit Planner, I want the house odds in my favor as the business owner and expect to have steady money coming in, not going out!

A credit spread involves selling a high-premium option while purchasing a low-premium option in the same stock and option type.

As a credit trader you have 4 strategies to generate income for your business.

The 4 main trades are:

  1. Short Put
  2. Short Call
  3. Short Put Spread
  4. Short Call Spread

In order to trade the SPY short, it would be best to implement a credit call spread.  

This trade will allow me to take advantage of the expected stalling out to slight pullback in the stock price in the near future.  


Wrapping up


A fractal is a never-ending pattern and is repeatable and found across everything in nature, such as, coast lines, pine cones, and snowflakes. 

Fractals are created by repeating a simple process over and over in an ongoing loop. Meaning that a pattern working on a weekly time frame will work all the way down to a 1 minute time frame.

And when you are selling options, you put the house odds in your favor!

Only then do you then have a winning combination that can give you the best shot at making money in the markets!

Now – start tapping into the inner workings of the stock market and make Fractal Energy a cornerstone of your trading business!

To get started, Click here to sign up for Options Profit Planner now! 

Author: Dave Lukas

Learn More

Leave your comment

Related Articles: