Ronin_trader

RVLV Bearish inclined Naked Calls 25 Feb Expiry (Feb Track 3)

Short
NYSE:RVLV   Revolve Group, Inc
On TD the contract price was 0.45 and so I decided to just enter 0.6 and to my surprise the order got filled immediately.

I think next time I will start with a high Ask price and slowly bring it closer to the Bid

Whats The Plan/Trade/Thought
  • This position is a play on the micro economics and less on the health of the company
  • There will be an interest rate hike in March and I expect late Feb will show people speculating on this number or at least the impact on consumers and the companies
  • While Revolve group is online ecommerce. Omicron with it’s high infection rates i’m sure will already be impacting it’s physical Supply Chain
  • Purely looking at the daily chart and not making any predictions the price is downtrending and has broken the 54 Support and Resistance line.
  • Price movement downward has also been very decisive with no recovery from Omicron and the Fed Interest Rate Decision
  • This chart also mirrors ETF XRT and all the other companies within the internet retail sector

    I Feel
  • I was struggling yesterday thinking how to approach identifying this trade. But now that I’ve identified the sector it feels painfully obvious.

    Imagine Yourself Taking The Other Side
  • As we just broke the Resistance line there is a chance that this could be a a fake breakout and snap upwards in a range
  • There are some price resistance on $51

    Imagine Yourself As A Neutral Observer
  • I won’t enter this trade with a Bullish stance the price action down is too rapid. With the inflation at an all time high, the Fed will be going hard on mitigating and bringing the inflation numbers down

    Look For New Information
  • I read an article on Marketbeat that was posted on the 10 Jan, indicating Revolve as buy. But I’m entering this trade with a micro economics lens.

    How Do I Feel Now
  • I am unable to convince myself that this is not a good opportunity to sell calls. But there is an obvious mental bias. I think if I was really presented options it would be Sell Calls or Don’t Trade. Selling Puts feels the most risky
  • I do wish the strike was protected by a support line but the support line at $74 is too far away and there are no good contracts. The $70 is 35% away from the last close (13 Jan) and near a broken 54 Resistance

    Trade Specs
  • Sold 167 Calls @ 0.6 - Strike 70
  • % to Strike 37.96%
  • ATR % is 50%
  • BP used 89K
Trade closed: target reached: Yay!
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