OA Sell: GME

I sold my calls in GME, booking a 50% loss in the position.

I find this market position very interesting, both based on what it is, and isn’t doing. We’ll discuss this here shortly after the close.

OA

Here’s a scenario for you tomorrow, since we’re tetering on the edge of a cliff here.

A little divergence went off in the market about 30 minutes ago. SPX, NASDAQ, and DOW go to new lows on the day. Russell does not. We’re watching this chart like a hawk, and are sitting on the last level of support before we head to the lows of the year.

If we open lower tomorrow, this ought to put markets into oversold territory (NYMO -60 right now). If we do open lower, but the Russell is firm, I am a buyer. Like the early August lows, the Russell firmed up, while the rest of the market drifted a little lower.

If these conditions exist, look for me to initiate a few new longs.

OA

I got called out in my last thread for giving a bullshit answer to a vague question.

Therefore, let’s paint a picture.

Let’s assume you are “Mikey” in the clip I’m about to show you. You recently funded your Zecco account with three stacks of high society. In order to run at the high rollers table, you laid down a bet that accounted for a pretty big percentage of your account. As a result of your bet, you draw low cards, but still a promising hand.

After some thought, Mikey doubles down.

Maybe partially due to peer pressure, but makes the call to blow his wad on one hand. As the result of that bet, he is then forced to work his way back with much smaller bet size over the next several hours at the lower stakes table filled with IBC readers that will not be attending our upcoming Investor Conference.

In this instance, my “bullshit” reply is valid. I have no idea what you’ve wagered here, son. I have 4% in this trade, which is my biggest option position. Being that I am already oversized, I cannot double down here.

If this is not a big position, buy more. But there’s no reason to go significantly broke here knowing that its a call option, and it can lose all its value.

OA

What I typically aim to do when initiating risk in a trade is to ask myself prior to entry where I am wrong on this trade.

At times we might overlook a low risk entry point for fear of missing out on a move. For example, the fact that FSLR was sitting a top its yearly highs all week had me a little anxious that if it went without me, I wouldn’t be able to enjoy the luxury of an option trade to run with my stock position. Looking at today’s beatdown, I now regret initiating the position as high as I did, even despite the fact that I still have a pretty strong reason to believe that it will/could work.

Even though I am technically wrong because I now have an unrealized loss, I still feel I am right in this trade. It’s okay to debate this line of thinking, because most of you evaluate unrealized gains/losses with a sense of finality that I do not. I trade for tomorrow, where most people I observe only trade for today.

As it pertains to being wrong in this trade, I think it is a move under $65-66. What say you?

I’ve spent a little time this evening looking over nearly every liquid publicly traded stock. Per time constraints on Friday evening we were unable to compile this weeks watchlist as a group. Therefore, I’ve gone on and put together a list of stocks that meet our typical metrics: price and volume behaviors, sentiment correlation, and volatility metrics. They’ve been posted on the After Hours with Option Addict blog for review. We’ll be drawing from those stocks for most of the week.

We left off on Friday with the Russell near the lower end of its year long trading range. Watch this instrument, as usual, for market direction on the week.

See you in the morning,

OA

PS- I’ve emailed most of you regarding the hotel discount instructions for the Wynn hotel. For any of you that are interested, email me for these details ([email protected])

The all powerful BABA has printed! Let’s move on…

Markets are weak on this special occasion, but there is a significant difference in today’s tone versus Monday’s tone. As I have sat here watching all market action unfold in front of my eyes today, there is one and only one thing that matters heading into the close today.

In After Hours with Option Addict on Monday, we looked at the individual performance of stocks. Specifically, we looked at the names of stocks trading higher on Monday, and then looked at the names of stocks trading down more than 3%. Nearly every growth stock was down more than 3% on the day in that sell-off.

Use the same template for today. We’ll digest this all after the close as we build our watchlists for Monday.

I am long of Russell futures here, GME Oct calls, and ready to grab some Oct P calls possibly.

OA