The Over The Weekend trade, also known as the OTW trade, is a trade initiated by a systems strategy, The strategy is quite simple, in the a long position is opened on Friday and closed on Tuesday. The system decides if the conditions are right for the trade, and the optimal time of the day to take it. This strategy was born from a statistical study of closing prices over a five year period, looking at the difference in closing prices from various ranges of days.
When we found that Apple on average closed higher from Friday to Tuesday, we investigated further on how we might implement that into a strategy. And so the OTW was created. The study looked at over five years of data and about 300 trading occurrences. And while 300 trades may not be the best statistical sample, it is remarkable how regular this phenomenon has been over such a long period of time, even in the face of such varying market conditions and the variety of things that happened to Apple.
In this video, I am simply selecting an appropriate options strategy to trade the OTW, called the Broken Fly, which is an unequal legged Butterfly. This is a neutral to bullish strategy.
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