MKC MAR75/FEB65 DIAGONAL PUT
BEAR RALLY SET UP
I've had MKC on my watchlist for about a week now. ON January 18th, the 20 day crossed the 50 day and made a new swing low on January 20th. Since then, it had a small bear rally back to prior support resistance of 79.09ish which it hit on the 24th. On the 25th, it traded below the previous day's low, however I waited one more day because I didn't want to get into this before earnings. With the gap down today, I executed my trade as there could be more down side to come based on the technicals.
I won't have any stops since I'm set up for max loss and risking less than 2% of my portfolio.
I drew a downward trendline/channel from the high of March 2022. On the hour chart, it recognized this channel from about April 20th 2022, to about the middle of May before it sold off.
This only has monthly contracts. I was originally going to select the 70 strike, but my idea is that it falls back into this downward channel within the next three weeks to reach my 65 target by the 17th of February.
Position management strategies when the stock goes lower
If this goes lower below my 65 target, I'll close out the entire combo and move on to my next trade.
Position management strategies when the stock goes sideways
If this goes sideways, I'll let my 65 strike expire and hang on to my 75 strike until March until it reaches my 65 target.
Position management strategies when the stock goes higher
If this goes higher, I'll let it all expire worthless since I'm set up for max loss.
Position management strategy at expiration
Come February 17th, if this is still above my 65 target, I'll hang on to my 75 strike until it does reach my 65 target. If we're at 65 or below 65 come the 17th, I'll close out the entire combo.
I've had MKC on my watchlist for about a week now. ON January 18th, the 20 day crossed the 50 day and made a new swing low on January 20th. Since then, it had a small bear rally back to prior support resistance of 79.09ish which it hit on the 24th. On the 25th, it traded below the previous day's low, however I waited one more day because I didn't want to get into this before earnings. With the gap down today, I executed my trade as there could be more down side to come based on the technicals.
I won't have any stops since I'm set up for max loss and risking less than 2% of my portfolio.
I drew a downward trendline/channel from the high of March 2022. On the hour chart, it recognized this channel from about April 20th 2022, to about the middle of May before it sold off.
Position management strategies when the stock goes lower
If this goes lower below my 65 target, I'll close out the entire combo and move on to my next trade.
Position management strategies when the stock goes sideways
If this goes sideways, I'll let my 65 strike expire and hang on to my 75 strike until March until it reaches my 65 target.
Position management strategies when the stock goes higher
If this goes higher, I'll let it all expire worthless since I'm set up for max loss.
Position management strategy at expiration
Come February 17th, if this is still above my 65 target, I'll hang on to my 75 strike until it does reach my 65 target. If we're at 65 or below 65 come the 17th, I'll close out the entire combo.
Trade active
Comment:
Letting my 65 strike expire worthless and hanging on to my 75.
Trade closed manually