Setup Leg

1. 5 b a 3 4 1 c 5 2 b a c B 3 C 4 Setup Leg 1 5 2 A b a 3 c 4 1 2 Elliot Wave Based Long Strategy SETUP: 0. Identify General trend and Wave of Indexes. Economy should be in an expansion, preferably, early stages of recovery. 1. Identify Group rotation - want to catch industry group heading from middle to upper percentile and into 80th percentile and beyond. 2. Identify Good Fundamental Stock with high Phase 1 and 2 scores within the target Group rotation. Your going to be Long in this Stock. 3. Identify the Average Upward Move for the Stock by Wave. You may have to analyze a few complete waves to get a good avg. move. 4. Identify the Average Downside move (and time) for the corrective a | b | c cycle. 5. Start with Wave 2, this is the A leg of you’re A | B | C setup for entry in Wave 4. 6. Wait for Wave 4 in the Stocks Cycle. You will enter between Waves 4 and 5. 7. Select Put with enough time to accommodate the decay of the expected down move to play mostly out.(and Premium) to expire in the Corrective phase of the after the Phase 5 Motive wave. Sell Covered Calls. Each Month, for which premium received and not called out lowers your cost basis by the value of the premium collected. As Stock Approaches end of Motive Wave, Sell Deeper into the money (ITM) in order to have Stock called away from you as Corrective Wave begins. Expiration Put Exercise Strike Price Short Put Exercised – You now own the discounted stock Target Entry Short Put Position – Collect Premium ENTRY: Sell a Put fairly deep In-The-Money. This is the counter-intuitive part of of the Trade. - our goal is to take advantage of the top of Wave 5 to take in the Maximum Premium But you don’t want to Identify Good Fundamental Stock with high Phase 1 and 2 scores within the target Group rotation. Wait for Wave 4 in the Stocks Cycle. You will enter at the top of Wave 5.