Everyone can see the Nasdaq 100 is extended. Heck, the index has added nearly 1000 points in only the last few weeks. But despite the price strength, we have a sign/signal that the mighty may be ready for a fall.
The 7-Day Average True Range (ATR) of the Nasdaq 100 Futures Market (NQ1!) hit the lowest level of year, and is down over 60% since May 20. I've linked to a related Video Idea on ATR below.
How we're expressing a short idea:
Keeping it simple. When the NQ1! hit 15670, we bought the QQQ Sep10w 375 Puts for a 1.02 debit. We'll likely spread if the trade moves in our favor this week. Risk is 50% of premium paid regardless of underlying so we stop out around .50
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Sold 25% 375P at 1.45 +40%
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Sold 25% 375P at 1.75 +70%
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Added heavy, 9/3 .77 - don't do this at home. :)
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Reduced at .80 for a scratch on 50% of add. Still long 50 contracts avg .65