I bought 1/31 expiry 200 strike puts at $1.65. Reasons for trade:
1) 60min chart - 20sma in downtrend, 10sma below 20, and RSI still under 50.
2) daily chart - stock retesting up against 10sma.
3) 30min chart - RSI needs to stay below 50, and I am looking for %K stochastic to drop below RSI again, as confirmation of my trade.
4) Risk is low - exit on trade over 203.74, recent 60 min high. Risk goes up if stock opens much higher Wed, so keep trade size small.
5) Reward is high - if price hovers in this area IV will raise option value. If stock drops (see chart) option value gains at least 50%.
*** Close this position before earnings on 1/30 (after market close)
1) 60min chart - 20sma in downtrend, 10sma below 20, and RSI still under 50.
2) daily chart - stock retesting up against 10sma.
3) 30min chart - RSI needs to stay below 50, and I am looking for %K stochastic to drop below RSI again, as confirmation of my trade.
4) Risk is low - exit on trade over 203.74, recent 60 min high. Risk goes up if stock opens much higher Wed, so keep trade size small.
5) Reward is high - if price hovers in this area IV will raise option value. If stock drops (see chart) option value gains at least 50%.
*** Close this position before earnings on 1/30 (after market close)
交易進行:
Holding puts - see #3 in above comment - RSI back below 50 and nice candle pattern.
交易進行:
Position reduced when stock showed 30m closing candle over 203.74 (as per my plan above). Holding a few in case stock turns lower Thursday.
手動結束交易:
I exited trade on 1/31 for a 74% loss. While it seems huge, my real principal lost was $492. My loss could have been much smaller if I held options into Friday's last hour... no, don't go there. Successful traders are happy with their exits, and they move onward to focus on the next trade setup.
