TSLA puts - Stochastic Oscillator signal for countertrend trade
This indicator tends to lead RSI. I set my %K to 14-day to match RSI. Chart is zoomed in a bit so you can see the yellow rectangles on 1/31 show that %K dropped from over 80 to under 20 in 3 time periods (candles). When this %K move happens in 2-3 candles (up or down), there is usually a quick move back in trend direction, and then price starts turning at some point. Sometimes it is not a true trend change but rather a pullback to support. This signal occurred on Friday, and you can see after that the stochastic shot back up; and price has also increased more. Today I have been checking 5-15-30 min charts for more support to buy puts.
This trade is high risk. Today's buying is reaction to analyst notes. If media mentions impact of Shanghai factory being closed, this may cause selling. For the same distance from stock price (up 150, down 150), calls cost twice as much as puts. I am opening a small position of 2/14 expiry 600 strike puts, based on 30m chart. I am not holding a rigid exit plan, instead will check stock near today's close to confirm my trade idea. Targets are 690, 655-650, 630-625 and below 600.
This trade is high risk. Today's buying is reaction to analyst notes. If media mentions impact of Shanghai factory being closed, this may cause selling. For the same distance from stock price (up 150, down 150), calls cost twice as much as puts. I am opening a small position of 2/14 expiry 600 strike puts, based on 30m chart. I am not holding a rigid exit plan, instead will check stock near today's close to confirm my trade idea. Targets are 690, 655-650, 630-625 and below 600.
Trade active:
Implied volatility increases are great for counter-trend trades when you buy before price action turns. I bought puts on 2/3 for $3.70 and IV was ~85. Today the stock is up $100 from when I opened trade and IV is now ~40 points higher, so my options are about 25% lower. Definitely keeping trade open. Remember on higher risk trades (reward can also be high) keep position size small. My 3 contracts used a tiny percentage of my capital.
Trade active:
Note on 2/4 there is a bearish engulfing candle and a long red candle at day's end (30m chart). IV increased so much my puts gained 80cents.
Trade active:
Target is near 10sma on daily, 670-650 area, but 720ish on 30m is cloud support, so let's see what happens. There are risks of IV drop, theta decay, and price moving back up, so better to take profit today.
Trade active:
Did anyone buy puts on 2/4? I decided to hold my puts another day, as I think there is more downside.
Trade closed manually:
Exited puts at 8.36 (bought at 3.70). Saw divergence with stochastic oscillator on 5min chart. Now look at this fast bounce.
