Short

AMD short to 151 following a breakout to ~170

Updated

I believe AMD to be in a wave 2 correction phase with a short term PT of ~151. Following the re-trace to 151 AMD could continue to to ~170 to complete a higher order wave 5.

I'll be looking to swing trade the PA to 151,and then straddle the bottom for a quick movement up to 158. Once (and if) the PA breaks and holds above 158, wave 3 will be confirmed and trigger longer term call options with PT of ~170

Note

Following a strong day AMD broke out of the wedge trend after catching support at ~154 rather than the predicted 151. I held out on entering into a trade until the end of the day in an attempt to straddle the continuation or correction tomorrow.

1 12/3 162.5 straddle

Depending on AM performance, plan is to cut one leg and ride out day

Trade active

Closed short leg at what I believe to be the daily bottom. Holding long leg to maximize profit during short-term rebound

Trade active

PA is holding along lower wedge trendline and approaching the 15m resistance.

Still holding the straddle long leg from previous trade and may open a day trade if the 15m resistance is taken as support

Note

One I looked at the larger timeframe and considered that the PA could be an ascending channel with rejections happening along the 15m resistance, I realized the price my break down and catch before further movement upwards.

Closed the long leg brining the total straddle profit to $72. I also scalped a call for 30, brining total trade profit to $102 on the day.

May enter for another swing before market close

Note

The channel did break down right after the last update

and inspection of 15m timeframe shows that the day low was also the momentum low implying there could be more downside. The price action also seems similar to the previous bear flag back on 22Nov.

Note

15m chart

Trade active

Took a step back before market close and realized I was falling into a hyper-prediction pit. Regardless of the pattern or technicals the price is likely going to break up or down in a big way from here.

So I just entered into another long straddle

Trade active

AMD straddle entered yesterday at market close.

Note

Note:

I should have more closely considered a large drop in implied volatility from yesterday to today. I bought into this straddle with the VIX up 11%, and today it is down almost 13%. This is causing my short leg to get hit particular hard from IV crush.

Running a 2:1 call:put ratio would have have been more favorable as I'm losing roughly 2x more on the put.

Note

At the 10:22 candle off the support test I went ahead and picked up another 160 call to modify the straddle into a bullish strap.

Now if we do get a breakout, the call gains should easily outpace the put losses...or I just lose more overall money when the whole thing blow up :)

Note

Mistakes were made today. I haven't realized all the losses on the last trade yet but will include the numbers when it all settles. However, the 2 biggest mistakes:

1. I lost sight of the bigger picture trends and positioned myself in a trade that found itself at odds with those larger trends. For instance, I had a previous PT of 165.5-173. So when AMD set a new ATH short of 165 I allowed outlook to bias bullish, when it is painfully clear after today that the PA would probably go back to the bottom of the channel. The same bias also let me ignore the truly massive head and shoulders pattern formed between 23Nov and today.

2. Kinda a caveat to #1 since the emotional/short-sighted bias it what drove this, but it was a mistake to alter the trade from a straddle to a strap without enough due diligence. In fact the initial trade was probably too rushed. I need to make it SOP to always compare a 15m to 5m charts on swings to make sure larger scale trends aren't ignored.

3. Mechanical errors. I screwed up my stops and actually closed the short leg instead of the long leg....right before the big drop in price. Truly an amazing feat really. With such a large downward drop, even with the losses on the long leg, I would have been like 8 whole ass dollars ITM on the short leg and absolutely net profitable.

4. Biggest mistake probably bar far was simple trade mismanagement. I didn't cut the trade manually after I realized I accidentally cut the downside protection. Honestly looking back I don't even know what the rationale was, but around the same time I got pulled into an emergency unscheduled actual work meeting and let both 160 calls run free on accident. Since I do WFH with a pretty demanding technical job it makes trade management even more important. I also had a bullish strap open with AAL today and properly managed that trade by stopping out and re-entering on a short position, allowing me to be net positive on that trade despite holding 2 calls when the price fell off. Maybe the psychological impact of having more capital at stake impacted me, or multitasking got the better of me, but either way the overall stark difference in how two bullish trades played out during bearish movements is very telling. Proper management made one net positive and the other huge losses.

Overall it was still a good day. Despite losing at least 50-80% on the amd calls, my AAL and SNAP gains completely off set it plus.

I definitely feel like my actual trade setup played out overnight and the correct call would have been a bearish strap to play the correction though.

We definitely cant win them all, but we should definitely limit how big the bag is when we do lose.

Note

kodyshepherdpersonal

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