OrderFlow trading: Option Assault

I was given an opportunity today to test DarkStar's method for a second time, the first attempt was last week. And again it played out by the book:

1. This morning information about a resting put option with a strike 1.3600 was leaked on TalkingForex.

2. EurUsd was in an intra-day down-trend, which quickly reversed, just as DarkStar noted.

3. A short up-trend was used to achieve a better price to accumulate offers being sold to break out buyers, to shake out short weak hands and to invite bottom callers to long, in order to hit them with a big sell-off forcing their stop orders into liquidation.

4. With a break out from a short-lived up-trend the down trend resumes, occasionally producing long up candles, scaring weak hands again and use propelled price to add to shorts at a better price.

5. As time is closing to the cut at 10AM NY, the price is breaking under 10-pip zone of 1.36. My first target is hit at 1.3615 and 1/3 position closed.

6. A fierce battle commences for about 15 minutes storming the 1.36 barrier. The option underwriter fiercly defends the strike price in order to avoid a pay-off and retain a premium. An option buyer fights to avoid paying a premium and to capitalize on whatever profit may be (a number of pips a price will be below 1.36 at a cutouff time).

7. An option buyer and stop raiders won again as price closed at around 1.3598, creating a small profit for  an option owner forfeiting a premium. But the battle is not over yet as now there are less defenders left to protect 1.3600 since the option underwriter doesn't care any more. Only people who care are stop raiders and people who have stops below 1.3600.

8. Half an hour later raiders managed to push price below 1.3595 and force a stop liquidation, visible on a strong down bar. However there was no cascading stop liquidation what would be visible as charts failed to produce consecutive large down candles. Therefore there was no more selling interest and it was a time to close positions.

9. I had an entry split in 3 parts and also had 3 take profits, all 3 were hit as limit orders.

10. The best part is this highly profitable fun happens several times a week in FX for every major, every week :)

Result of the trade: 130 pips collected within 3 hours. Stop was 50 pips as emergency, I would be closing positions if retraced over 20 pips. OrderFlow principles and OrderBook data feed was used to select entry points precisely and also monitor for the potential bail-out.