WO Trade

Did anyone else WO entry RKT on 10/3/14?

I saw the trade but I passed on it to trade another stock. Looked like a good entry though. I was a little weary about the bounce being just that...a bounce and hence we are where we are now.....thats the perils of trading though. Still holding what I have but I tomorrow will be the tipping point.

FM.

No, not currently in RKT but I am watching it for educational experience. I cannot justify my reason for staying out based on the W/O rules. The technical components are all there and hope it works out for you. My justification for staying out is that I was too much on the fence. Anytime I get like that I am better off trusting my instinct and staying out if I am not truly committed. The three reasons I hesitated:

1.) Expecting market to continue downward trend in the near future. Even though I might have a hot stock the overall market pressure could impede my trade.

2.) Weekly indicators turning over indicating down. Yes, I know weekly is not part of the thought process and happens to be at BBB but the indicators concern me.

3) Biggest reason is that I have gotten burned so many times with Daily MACD in that current position. Almost there but not enough to convince me if I had to take a stand with a gun to my head (yes, GW analogy). I would want to see the red a bit closer and more of a 45 degree angle up. Hard to explain but this almost there thing has bitten me too many times.

I am certainly not suggesting I am right but that was my reasoning for sitting on the fence. I could not help but notice #1 and #2. #3 is on my "Be Careful" checklist. I need that Daily MACD either in my direction at entry or to the point where I feel 100% confident that the Daily MACD will definitely turn, cross, and confirm within two candles of my 233 or 144 entry or I am not making the trade. If I don't see confirmation then that is part of my personal exit criteria. My batting average based on the position of Daily MACD at the time of the below entry is about .500 (some work / some don't). These are my personal rules after studying four years worth of trades comparing those that worked vs. those that didn't looking for trends. This has nothing to do with GW. It keeps me out of some trades that work very well but it also keeps me out or gets me out of some that could fall off a cliff.

Again, not suggesting there was anything wrong with the entry as the components are all there. Just providing another perspective as to why I was hesitant and subsequently stayed out based on my comfort level (or lack there of).






Edited 1 time(s). Last edit at 10/07/2014 09:41PM by NCTrader.

As an aside and just to clarify the 45 degree angle comment was not meant to imply that I pull out drafting tools and measure the angle. I was attempting to describe what I look for visually and I actually have those words ">=45 degree angle" written in my rules as a reminder of the types of things I am looking for. There is a trading methodology built around actually measuring the angles and rate of change specifically looking for 45 degree trends. I don't subscribe to that. Too much like work.

Looks like this guy is giving another signal but this time on the Daily!...the Signal is right at IVR on the Daily trendline down. To me it is a bit riskier since it has not broken this trendline quite yet. Confirmation would be nice. I like the fact that it has a Hammer deep into the Weekly band. Earnings is on 11/3 which is kinda soon especially since it would be nice to hold something through FWTZ.

What do you guys think?

I think buying is a personal choice and buying/holding through FWTZ even more so. If you feel the overall market move down is over for now and you would be willing to put all of your W/O into the trade then that is your choice. I am not going to give advice either way. In general I like the setup end of day 10/15 more than I did on 10/3 even though the Daily MACD is not given the signal of strength that kept me out of the 10/3 opportunity. You do have other technical reasons to consider that were not present before. SRSI and histo divergence coupled with engulfing pattern on Daily suggests down in short term could be over. You have a few other softer reasons on Daily as well. Weekly was well outside BBB and now pulling back possibly forming a hammer and monthly bouncing off BBB. 233 would have supported the 144 in addition to everything else. The one thing that is worth mentioning. Since I try to consider all possibilities it is also worth mentioning that the Weekly has been forming a descending triangle since October 2013. I am not an expert nor would I consider myself intermediate when it comes to probabilities associated with triangle patterns. As I understand it odds suggest a descending will break to the downside and ascending to the upside. That would be more longer term but worth pointing out. In very short term 48 to 50 is within realm of possibility and falls within the 5% to 10% range assuming we do not wake up to a bloodbath tomorrow. ES futures still indicating possible rise in the a.m. if current charts hold. Testing 1st level minor resistance now around 1865. Next levels to watch are 1875 and 1885. It will be interesting to see what happens when Daily ES reaches 200MA around the same time 233 ES reaches 50MA

For RKT, the bid-ask spread on the options is pretty bad for anything deeper in the money. Is there any kind of tactic you can use to get better pricing or does it make sense to just stay away from doing any kind of w+o trading on this one just because of the options pricing?

Sold the $50 Nov calls on 10/21/14

Recent ongoing WO trade

20Jan15 BTO SWN 7500sh at 24.37 = 182813
22Jan15 STO 75 Feb15 26.00 C at 1.05 = 7810
29Jan15 BTC 75 Feb15 26.00 C at .45 = (3443) net 4367 on calls
02Feb15 STO 75 Feb15 26.00 C at 1.00 = 7432 net 11799 on calls

Net on stock if assigned = 12225 + Net on calls 11799 = 24024 (13.1%) net on trade

More to follow.

Spang

Spang,

Nicely done! Thanks for posting your trade - I will make sure to check it out!

So I got flat yesterday. Got some work/life stuff going on and needed to take something off my plate.

The stock rose yesterday to near $27.00 so I bought the call to close and sold the stock:

10Feb15 BTC 75 FEB15 26.00 C at 1.27 = (9593) net 2206 on calls
10Feb15 STC SWN 7500sh at 26.85 = 201529 net 18446 on stock, net 20922 on trade, 11.4%

Not "One Good Trade" for sure, but Happy In Seattle, nonetheless.

On to the next one!