SMA- earnings play- a beat with a drop for a pop LONGSMA reported today with about a 2% drop - while traders responded with a 8% drop. Everybody
especially auto mechanics love their stuff. So were they looking for more? It is hard to say.
Idea is on the chart. I am looking for a recovery in a reversion to the mean. It looks like
it's underway. For those familiar with volume profile analysis and trading the best buy short
was upon the drop out of the high volume area ( lower zagged blue line at 9:45 AM EST) and
the best exit was the transient cross over and above the Hull 35 moving average at 12:15.
This would have been a monster trade of about 600% if the strike 280 expiring 2/16 was taken
about 9:45 AM and closed at 12:!5 PM; the price of about $150 for the single contract would
have yielded $1300 and netted $1150 for those 2.5 hours for an hourly rate of over $400.
Enough said about the short, this idea is about the backside. The stock shares trade is what is
is. The options trade in my opinion only is a call contract striking $ 270 just under the 0.5 fib
retracement is currently priced at about $530. If price gets above $270 or even gets over the
$280 fib level line in the next week, the return again would be 300-600%. I am taking this call
options trade, I will enter on a pivot low of the day on the share price chart. I'll set a stop loss
of 20% meaning about $100 is at risk. 3X the premium is about $ 1600 so the reward to risk
is 16. Managing with TradingViews handy alerts on the stock chart for moving average
inflections and cross-overs as well as MACD line and signal intersections should take about
one hour of combined time in a week. I consider the potential gain to be
excellent for the anticipated expense of time.
