OptionsRising

Buy COIN calls before buyers rush into stock. Selling exhausted.

Long
NASDAQ:COIN   Coinbase Global, Inc
SWING TRADE
Price opened in the "buy zone" that I had marked in my earlier chart (see linked chart and comments) and my good till cancelled call trade executed. I added calls when price was around 190.

DAILY CHART
> White lines show a zone that can be used with 30m chart for trading.
> Black lines show bullish divergence . Usually after this divergence there is another drop and then a move higher.
> Yellow rectangle shows a spike in %K which warns of a reversal, again usually after another with-trend move. My rule is for %K to move from 20 to 80 within 3 candles, and this took 4, but it was still worth noting.
> Orange line helped me decide price would not go much lower than 190 so I bought swing calls and held them through the "final drop."

30min CHART
> Purple lines show divergence that led me to buy calls on 19 Jan.
> Yellow rectangle shows my trade entry and exit on 20 Jan as price stalled around 230, white resistance line. I was still waiting for price to be in the buy zone (under 213) or break over daily downtrend line.
> Pink rectangle shows my stochastic %K warning that buying will soon increase.
> Price opened in buy zone today and kept falling. Based on high selling volume and the stochastic signal, I bought more 18Feb calls and will hold for a move back up to 220-230, maybe higher.

DIRECTIONAL VOLUME
When you look at selling volume on 30 minute chart (as with many stocks today), you see heavy selling and directional selling volume extremely high. This is a sign that sellers are finally coming out in force, which means that buyers will come in soon and stock begins a bounce.
Trade active: I definitely bought calls early, and without confirmation of any uptrend beginning or bottoming complete. So why did I do it?
1. The indicators I detailed above tell me that price will turn up soon, and I wanted to have a few calls in case of a higher open on Monday. If not, I have time until expiry.
2. Bitcoin trades around the clock so if price bottoms or reverses, I wanted to have calls before Mondays' U.S. market open. As others pointed out, Bitcoin movement affects COIN.
3. I was aware of high put gamma and monthly opex on Friday that helped create strong selling pressure, and indicators show a reversal is due (even if temporary).
In counter-trend trades, I keep a small position and allow time for the bottom and trend change to happen. The reward to risk is tremendously good in these kind of trades.
Trade closed manually: I closed this trade today when price was around 196, as this consolidation higher could break lower again. With price below 200 and the weekly chart giving no clear indication of support or a move higher, I sold my calls for small losses. Will wait for a new signal before buying calls again.
18Feb 250 strike, buy @ 3.30 average, sell @ 2.90
18Feb 280 strike, buy @ 1.40 average, sell @ 1.15
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