020. PIGGISH PLAY - Short Stamps.com (STMP)
Updated
Stamps.com is trading over 250 dollars/share.
That's hilarious.
I'm not going to belabor the fundamental situation as it pertains to its incongruence with reality, so I'm going to focus on the technical setup we have here.
There are two clearly defined channels displayed above; the rising price channel and the sinking RSI channel. When this combination persists outward over time, the divergence becomes pronounced and both people and robots alike eventually start to notice.
Having watched the tape roll on Friday, it seems that the tipping point to the downside has either been triggered already, or is going to be triggered early this week.
Either way, I think you will find success shorting this stock on the first red day of this week.
***NOTE: Do not enter a short position if the market starts tomorrow off by ripping higher, for whatever godforsaken reason. Therefore, I would wait for the first 20 minutes (or so) to shake out before putting any real size behind this. The reason is that Stamps.com is in the same realm of business as Amazon, who is set to report earnings in a few days. Given Amazon's last ER, it might be a good idea to keep an eye on both stocks before and during this short play.
Ok, now onto the Pig Play specs:
1) Equity Short Play: See annotations in the chart above for key price levels and enter within a range of +- 3 dollars of the ideal entry point, in case the market just falls apart on the button.
2) Option (Put) Play: Adhering to the details listed in the "NOTE" above, purchase puts that have a strike of 255 dollars and an expiration 11/06.
While the volume/open interest for this expiration may be less favorable than the same-week's (10/30), I will not recommend touching 10/30s given Amazon's ER and the risk that comes along with it. If you end up doing it anyway, I would advise buying an OTM AMZN call to hedge.
Best of luck bears.
- StamPig
NASDAQ:STMP
AMZN
SPX
NDX
That's hilarious.
I'm not going to belabor the fundamental situation as it pertains to its incongruence with reality, so I'm going to focus on the technical setup we have here.
There are two clearly defined channels displayed above; the rising price channel and the sinking RSI channel. When this combination persists outward over time, the divergence becomes pronounced and both people and robots alike eventually start to notice.
Having watched the tape roll on Friday, it seems that the tipping point to the downside has either been triggered already, or is going to be triggered early this week.
Either way, I think you will find success shorting this stock on the first red day of this week.
***NOTE: Do not enter a short position if the market starts tomorrow off by ripping higher, for whatever godforsaken reason. Therefore, I would wait for the first 20 minutes (or so) to shake out before putting any real size behind this. The reason is that Stamps.com is in the same realm of business as Amazon, who is set to report earnings in a few days. Given Amazon's last ER, it might be a good idea to keep an eye on both stocks before and during this short play.
Ok, now onto the Pig Play specs:
1) Equity Short Play: See annotations in the chart above for key price levels and enter within a range of +- 3 dollars of the ideal entry point, in case the market just falls apart on the button.
2) Option (Put) Play: Adhering to the details listed in the "NOTE" above, purchase puts that have a strike of 255 dollars and an expiration 11/06.
While the volume/open interest for this expiration may be less favorable than the same-week's (10/30), I will not recommend touching 10/30s given Amazon's ER and the risk that comes along with it. If you end up doing it anyway, I would advise buying an OTM AMZN call to hedge.
Best of luck bears.
- StamPig
NASDAQ:STMP
AMZNSPXNDXTrade active
One other important thing:Not just with STMP, but pretty much any stock that you are looking to either short or buy puts for, make sure to use LIMIT orders throughout the day.
If you chase and place market orders, traders like myself will have limit sells that are about 5x times fair value (especially puts on low-floaters) waiting for a lotto fill.
Just remember NAHT market and you should be good.
Best of luck.
Trade closed: target reached
You could've added size at the "mediocre" entry above, or you could still be holding puts for a later date.Closing out because I took profits on the 11/06's and did not re-enter.
But I might, if the market leans towards crash city on Monday.
Note
"Realistic" not "Mediocre" Entry Line.
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