Options trading coach Jo created a video to show examples of support on charts. Support is an area and not normally a specific number. Traders normally round the support area to “quarters” – $.25, $.50, $.75, $1.00 For example, if support was at $68.17, a trader would either round down to $68 or round up to the next quarter which would be $68.25.
Always look for the support area when evaluating a stock. If the stock is moving downward and approaching the support area, make sure that the stock closes below the support area and then get confirmation of going even lower the following day or two before buying puts. If the stock is moving downward and approaching the support area, make sure that the stock bounces up from support and gets confirmation of going higher the next day or two before buying calls.
Train your eyes to see significant support. Draw support on your charts. Notice that the more times that a stock respects support, the more significant the support.
Here’s to another good trading week!