Delta airlines has stayed in an upward trend channel the past 4 months. Today it peeked out above it at $43.67. I saw this as a good entry for a DAL$42-45calendarSpreadStrangle12/11-12/18. This gives me a week to profit the price action on the put side and 2 weeks to profit the price action on the call side. The reason I spread the expiry dates like this is because DAL was at the extreme 4 month trend channel high so I'm anticipating sooner movement on the downside and later movement on the upside. Either way I'm covered for the future price action with risk management. The only potential losing part of this trade is the theta, time decay, that's why I entered a strangle at an extreme point in DAL chart pattern expecting movement. Do your own due diligence, your risk is 100% your responsibility. You win some or you learn some. Consider being charitable with some of your profit to help humankind. Small incremental steps work : If you double a penny for a month it = $5,368,709. Good luck and happy trading friends...
I'm new to investing so I understand about 3% of what you wrote, but it's helping me learn...or at least realize I have a lot to learn. Any dumbed down version of your analysis would be greatly appreciated for a newbie.
Also....could you explain this a bit more to me under your common mistakes section: +5% portfolio trades.
Thanks!
Options360
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@speedoh remember everybody was a newbie at some point. Even Jim Cramer. lol. The 5% is a conservative rule for risk management. If you trade for several years you'll learn that not losing money is at least as important as profiting for your portfolio. For example: $1000 trading account @ 5% would = $50 trades. You'll be wrong and you'll be right sometimes. Nobody is always right. Point is to have a statistical probability of more right than wrong. hahaha. So if you're disciplined & organized day in and day out, you'll get exponentially better at trading in the beginning. Good luck!
speedoh
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@growerik Thanks so much for the reply and the detail! I didn't plan on getting into the market but after my company was acquired I ended up with a few bucks in my brokerage acct. Laying in bed one night I bought some moderna (already in and out of that--twice lol) and Pfizer (hoping for a spike after the EUA next week)...so yeah, these trades aren't even based on fundamentals but rather public need/emotion. Bought DAL, UAL, and AAL blindly just to take advantage of what should be some sort of return in 2021. Wanted to buy MAR when it was in the 90s but didn't expect it to creep back to 130s so quickly. So far just buying and exiting when i clear at least 15-20% (moderna ended at +75%, not bad for a first trade), but using this time to try to learn as much as possible as I know this isnt a viable long term strategy.
Thanks for this analysis, personally i'm a holder from the bottom just above $18 and bought more at $26-$28 targeting the previous ATH before the coronavirus crash in March @ $52. From there I have no idea where the price will go but I know this company is too big to fail, funded by the government stimulus, blasts CNN thoughout its terminal, serves delicious Biscoff cookies, a Dasani water, and a bag of Cheez-its. Please relax and enjoy your flight as DAL touches ATH again
Also....could you explain this a bit more to me under your common mistakes section: +5% portfolio trades.
Thanks!