PLCE crash and flush on pre-emptive warning from executives LONGPLCE as shown on the 30 minute time frame had a "waterfall" event when a bad news catalyst
hit the wires. Executives announced earnings issues one month out from the report due about
March 14th. Maybe is real and may not. The are no filings available to show any insider sell-
off unlike what is going on at General Dynamics at its all-time high. Could those executives
push traders to bail on the stock, force it to crater and then buy even more at the bottom or
have friends and family help them if they are well informed ? Who knows ? Does the CEO of
TSLA have a plan to help share prices drop so when his new compensation plan is set up he
gets even more shares and price rises to make his unrealized losses magically disappear.
Is there manipulation in the market ? Is this a case of it ?
Anyway enough said. PLCE is in early reversal and recovery. It has crossed the moving averages
on the chart and there is a massive volume of buyers scooping from the bottom in the
closing Friday afternoon. I was one of them. My shares and options are few. ( compared with
the CEO/COO/CFO guys at Children's Place.- they typically buy 100,000 shares at a pop - after
all they have the confidence of already knowing what is going on inside) I typically want to
see 2-3X relative volume to put on a big position. This is 4X. Seems the risk is low compared
with a 60% upside back to price levels before the news. Price has already recovered partially.
My stock trade is 5% above break even after less than a day and now has a 3% trail stop so
I don't need to pay attention to it. The call options targeting $19 for March 16th are up 16%
in the first day. I will sell to close a day or two before earnings to hedge my suppositions.
If earnings are as bad as these executives say. The call options will plummet.
My alternative is to keep the call options running but hedge them with a single put option
below ITM for a strike OTM expiring the same day setting up a strangle to take much of the risk
way. In that case, the call options would still fall with a bad earnings miss but the put option
will provide insurance buffering the loss. It remains to be seen how this plays out and I will
check for SEC filings at intervals. For now, I will chase the relative volume because it is higher
than the typical for similar scenarios. Best of luck to any traders who take this trade.
