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VXX Bearish inclined Naked Calls 1 Apr Expiry (Apr Track 1)Whats The Plan/Trade/Thought I purposely ended my March trades last week because I felt this week would be super volatile given the Fed announcements on interest rates. This play turned out well as I got to write VXX calls that end 1 Apr at an amazing price On the 15 March, I noticed that the VXX had stopped correlating with the market and I believe this had to do Barclay suspending new share creations of their VIX Short Term futures ETN (VXX). In a statement, the bank said it ran out of issuance capacity for the two products and would halt new creations indefinitely. It claimed the halts were not a result of the war in Ukraine This divergence, allowed me to quickly write VXX Call options that expires 1 April at $3 a contract. I decided to use a smaller Margin (50k) because it is still a VUCA global situation and I wanted to have room to maneuver. I have also never seen the VXX diverge so drastically before. I also believed that the Fed’s announcement would already be factored in to the past weeks and current volatility I Feel Pretty damn good, the VXX as aligned back to the market and right now the market is pretty bullish. Lengthen my distance to strike. Imagine Yourself Taking The Other Side This trade is very opportunistic in timing and volatility. There is no way I would take the other side given the price movement. Imagine Yourself As A Neutral Observer The risk of this was the unknown of why the VXX was diverging from it’s original intention and what the implications where. Look For New Information I did a search to understand what was going on with the VXX, but I decided that it was better to look and based my decision on the current sentiment of the market. How Do I Feel Now I am very very happy with this play as it mitigated risk by having a shorter time frame, high contract price and also leveraged my understanding and tracking of the market’s key events. Trade Specs Sold 60 Calls @ 3.00 - Strike 58 % to Strike 41% ATR 98% BP used 51k Max Gain: 18k
CBOE:VXXShort
by Ronin_trader
Eve & Adam Double Bottom confirmation on Costco ($COST)Earlier this month, Costco made confirmation of an Eve & Adam Double Bottom chart pattern as it began seeing daily closes above the mid range between lows. This pattern indicates a fairly high probability (about 88%) of a bullish reversal relative to the sell off which from the recent all-time high (571.49) achieved on December 29th, 2021. Today, the price is within 10 points of the all-time high. I'll be looking over the coming weeks to see what happens next, and for possible positions. From here, I see one of two likely outcomes over the near term: A) COST breaks out above the previous high and likely has a forcible move to the upside, or... B) COST gets rejected from the current levels in the near term and has a pullback to somewhere around $520 In the case of A , I'll be looking to short either with a PUT spread, or potentially straight up long PUTs - which have a greater risk/reward but are enticing considering the macro picture of the broader market/economy as a whole. In the case of B , I'd shop for a long position with some kind of CALL spread. The statistics indicate that track B has about a 2/3 chance of playing out. This could be even more advantageous because it could potentially offer both decent long and short opportunities over the next few months. We'll have to see where the chips fall.
NASDAQ:COSTLong
by InnerMotionTrading
1
VXX Bearish inclined Naked Calls 11 Mar Expiry (Mar Track 1)Whats The Plan/Trade/Thought I entered this position as I believe that we are currently in a sideways bearish situation. The markets took huge dips since late Nov to Jan and while it has recovered some of that loss. The S&P and especially the NASDAQ show that at least for now, the constant bold bullish days are narrowing Even though I am taking a sideways bearish stance. I still sold calls as we have just gotten out from a terrible 3 months of nose bleed drops and I think there will be some respite where market participants will try to determine what is the next direction Writing calls also allow me to develop a hedge on the other trades which will be bearish I Feel I entered this trade on Monday and it feels almost clinical as it was already part of my plan and the indexes were aligned I would have liked to get a better price to weather some potential volatility but it is a decent price at 0.71 I would have also preferred to have this trade expire on the 4th March way before the mid March inflation implementations Imagine Yourself Taking The Other Side I would be slightly worried as the market in the past 2 days have been bullish. Also I did try to initially take a sold PUT trade, but the prices for them and the % from strike were not optimal. I guess the market expects more bullishness? Imagine Yourself As A Neutral Observer VXX eats alot of margin fast as it is also a reflection of the tech stocks. And that could limit the fund’s movements. Regardless of direction I think with a good 63% of space between the entry and strike is prudent Look For New Information I am accepting that if the market does furiously dip too fast and too hard. I might be in a difficult position. The good news is that the major Tech earnings are over. How Do I Feel Now I neither feel happy or worried. Just somewhat clear but edgy given what we have just gone through in Nov - Jan Trade Specs Sold 125 Calls @ 0.71 - Strike 33 % to Strike 63% ATR 64% BP used is 91k Max Gain: 8875
CBOE:VXX
by Ronin_trader
4
JWN Bearish inclined Naked Calls 11 Mar Expiry (Mar Track 2)Whats The Plan/Trade/Thought I identified this trade by looking at Finviz Groups and shortlisted the mid volatility Industry players (1 Month bull, 2 - 1 Week bearish). This was because I wanted to be trading in industries with less volatile price movements. Previously for the past 4 months I have been trading in industries at the forefront of any movement. Travel, Banks, VXX JWN is part of the department store industry and has seen a huge dip (20%) on the 24 Nov due to lacklustre results. While I don’t expect any huge dips in the near future, I also don’t expect huge bullish jumps especially with the current climate The other department store counters I explored were M and KSS. I liked KSS’s price movement also as it already spiked on the 24 Jan due acquisition news. M did not provide a good price for options contracts I Feel I felt good for this trade and tactic as I have adjusted by trade selection and strike prices towards a volatile market bearish ranging market. This means I will take extra far strikes, even through it means sacrificing some alpha Imagine Yourself Taking The Other Side I would feel afraid given all the negative news on Ukraine and Inflation. I do not think I would take this trade on the opposite side at all. Imagine Yourself As A Neutral Observer While there is confidence in selling calls, there is also the earnings release on the 1 Mar. But given the entire market I think this is a safe bet. There is enough room for the price to rise (33% from strike) and it expires on the 11 March just before the release of the Interest rate increase (Week 14 Mar). Look For New Information I am clearly rejecting the risk of earnings and if I am wrong in this trade. This would probably be the reason. How Do I Feel Now I feel confident since was planning it and since I entered. This is a good trade and if it goes south it would either be because of me ignoring Earnings or just how the world turns. Trade Specs Sold 270 Calls @ 0.33 - Strike 27 % to Strike is 33% ATR is 55% BP used is 55k
NYSE:JWNShort
by Ronin_trader
2
XRT Bullish inclined Naked Puts 26 Nov Expiry (Nov Track 1)Whats The Plan/Trade/Thought Bullish Stance XRT are retail discretionary companies and right now there seems to be alot of optimism. Consumers seem to be find paying for the current rising prices of products. I think will continue with the festive period Sep Consumer Spending has lost momentum but still grew at 1.4% Sep Personal income was up 0.9% Current price has broken a key S&R line at 98. My targetted Stike is 86.5 and is below another S&R line 89. Price to strike is around 14% seems decent especially since the current price movement is very bullish I Feel Feel ready to trade, slightly impatient cause I want to lock this in Imagine Yourself Taking The Other Side Inflation related concerns might hit anything consumer fronting hard and with the 4 Dec review on the Debt ceiling there might be some concerns and media coverage as we get closer Bit concern as I was expending to trade in a sideways bearish volatile movement. But the past 2 weeks have made the market very clearly bullish. Trading my original plan seems almost contrarian Imagine Yourself As A Neutral Observer There is optimism in this trade, however the long cancel on the 3 Nov seems unnaturally long. This means it might gap back into the range But the bullish momentum matches the current market sentiment and if we are being pure in trading what is in front of us and not making predictions. This is the right decision Look For New Information Top 9 out of the top 10 holdings are all up with AEO the highest at 6.26% (American Eagle Outfitters) How Do I Feel Now I think this and my VXX trade is very aligned and while it opposes my early market reading - Sideway Bearish Volatile. Purely trading what is in front of me is a clearly Strong Bullish Trade Specs Sold 0.38, 70 Put Contracts @ Strike 86.5 % to Strike 14% ATR % is around 50% BP used 60k Max Gain: est $2660
AMEX:XRTLong
by Ronin_trader
2
VXX Bearish inclined Naked Calls 11 Feb Expiry (Feb Track 1)Whats The Plan/Trade/Thought Market seems to be ranging with deeper drops. This VXX trade is positioned as a hedge as it takes a bullish market stance. I like this structure of having a broad market hedge and especially a position that expires early in the month. As I would still have a solid feel of the previous month’s sentiment. VXX seems like a good trade for early month as the BP drops drastically as it gets closer to expiry. If price goes against you, the expiring previous month’s trade will release BP to support it. VXX contracts sometimes also have good premium as it spikes more during volatility events For Feb’s VXX entry I will wait until 12 Jan after Jerome Powell’s speech. As that could spike the premiums and provide more visibility on the market direction. I Feel I feel confident on the trade and especially how it fits into the entire trade structure. Taking advantage of the entry and exit timings and the nature of VXX and it’s BP behaviour (It reduces drastically in size, closer to expiry). Imagine Yourself Taking The Other Side VXX is also good as it is a market wide counter. Only worry is that it is exposed to the volatility of tech The Omicron news on the 26 Nov drove the price up by 47% to $30, while it did fall after 6 days. The recency and the potential for VXX to increase in a Black Swan event is also a potential and the BP requirements to maintain would be extremely large Imagine Yourself As A Neutral Observer I don’t expect another super volatile Black Swan event happening in the next month. Especially since knowledge on Omicron and the Fed’s inflation mitigation actions are clearer. But the market movements from Omicron in Dec really scared me and I need to see how I can better shield myself Price is steady downtrending Look For New Information While Omicron has mild symptoms, the high infection rates are hitting businesses even harder because there is a direct impact on labour which are the legs for most businesses. I wondering how this will impact Q1 earnings How Do I Feel Now I feel confident and worry free Trade Specs Sold 123 Calls @ 0.63 - Strike 29 % to Strike 62% ATR % is 67% BP used is 89k Max Gain: 7749
CBOE:VXX
by Ronin_trader
RVLV Bearish inclined Naked Calls 25 Feb Expiry (Feb Track 3)On TD the contract price was 0.45 and so I decided to just enter 0.6 and to my surprise the order got filled immediately. I think next time I will start with a high Ask price and slowly bring it closer to the Bid Whats The Plan/Trade/Thought This position is a play on the micro economics and less on the health of the company There will be an interest rate hike in March and I expect late Feb will show people speculating on this number or at least the impact on consumers and the companies While Revolve group is online ecommerce. Omicron with it’s high infection rates i’m sure will already be impacting it’s physical Supply Chain Purely looking at the daily chart and not making any predictions the price is downtrending and has broken the 54 Support and Resistance line. Price movement downward has also been very decisive with no recovery from Omicron and the Fed Interest Rate Decision This chart also mirrors ETF XRT and all the other companies within the internet retail sector I Feel I was struggling yesterday thinking how to approach identifying this trade. But now that I’ve identified the sector it feels painfully obvious. Imagine Yourself Taking The Other Side As we just broke the Resistance line there is a chance that this could be a a fake breakout and snap upwards in a range There are some price resistance on $51 Imagine Yourself As A Neutral Observer I won’t enter this trade with a Bullish stance the price action down is too rapid. With the inflation at an all time high, the Fed will be going hard on mitigating and bringing the inflation numbers down Look For New Information I read an article on Marketbeat that was posted on the 10 Jan, indicating Revolve as buy. But I’m entering this trade with a micro economics lens. How Do I Feel Now I am unable to convince myself that this is not a good opportunity to sell calls. But there is an obvious mental bias. I think if I was really presented options it would be Sell Calls or Don’t Trade. Selling Puts feels the most risky I do wish the strike was protected by a support line but the support line at $74 is too far away and there are no good contracts. The $70 is 35% away from the last close (13 Jan) and near a broken 54 Resistance Trade Specs Sold 167 Calls @ 0.6 - Strike 70 % to Strike 37.96% ATR % is 50% BP used 89K
NYSE:RVLVShort
by Ronin_trader