My white resistance line connects the daily close from Jun and Aug 2019. Yesterday AAPL opened at the line and sold off, and today it is a small inside bar so far. Watch price action on 30min, daily, and weekly. Downside targets are 250, 238, 224-218 You can create stops based on loss amount and/or stock price. Stock should remain below 266, but adjust stops and if you believe in the technicals then you should be comfortable, with a swing trade, to hold a few contracts through volatile price moves. For example, stock could open above your stop at 268 so you see a big paper loss but then it sells off and you start making a profit. You have to be able to hold options through these moves, so you 1) risk less capital, 2) have a clear plan for your trade and 3) have confidence in your technical indicators. If you are still learning, or are new, then you should be more cautious and keep your trades small.
Comment
⋅
I closed puts yesterday when stock opened over 268 and started moving higher.
The support-line (in white) you drawn is not within the rules of technical analysis.
Conclusion following that line will be incorrect
DigitalData
⋅
Red line 5D chart > your weak white line lol
dwrn1972
⋅
@DigitalData, sarcasm... people love telling other who they, we just have to listen the first... Great insights you proved to a fellow trader.
DigitalData
⋅
@dwrn1972, One concept people seem to miss is that support and resistance swap all the time and some people believe that once broken you dont use the trend line which I can vouch for is wrong usually. If it has 3-5 bases and finally breaks that support is now extremely strong resistance if bases are being made more and more on both sides thats why you have abide by them for a long period of time. Just drawing low trend lines can get you in trouble not seeing the much stronger pre existing ones.
DigitalData
⋅
Your line is drastically off lol that's a weak line the only important one is the vertical one. You also didn't draw the other support underneath the stock which is x5 the strength of your white line.
OptionsRising
⋅
@DigitalData, Thank you for sharing your chart. Your 5day look is interesting. I believe my daily trend line is reliable, and there is also a horizontal resistance line around 268 (daily chart). Today the stock is still under both lines. Also, I update my view as indicators change.
DigitalData
⋅
@OptionsRising, You're telling me you trade options on daily? Interesting I guess I do two week options
OptionsRising
⋅
@DigitalData, I agree with you about the importance of keeping trendlines on charts.
To answer your question- Yes I mostly day trade with weekly expiry stock options. My journey to successful trading has been a long one, with more struggles and failures than I ever anticipated at the start. I have learned to believe in my chart analyses due to my results. Sometimes I am wrong about the time it takes for a price move to occur, and sometimes I am just wrong. I only started posting charts on this site after I created a record of success for myself. I am very aware that many come to this site while learning about trading, so I think twice about my confidence in a setup before posting it.
Sesh1985
⋅
Do you think the stock price comes down ?? I truly don’t see why market is over selling in this pandemic. Curve is flattening but i don’t see it is going way down in thousands and also unemployment is going uptrend
OptionsRising
⋅
@Sesh1985, I do think AAPL price will move lower again. I am basing this on technical indicators, not on general pandemic news or fundamentals. Interestingly, stock closed only one penny below 268 resistance on Thursday. I will be looking at daily RSI and would like to see stock close lower on Monday. If AAPL gets over 268 or my trendline then my analysis will change (and I will sell all/some of my puts.
Conclusion following that line will be incorrect