Updating this on 5/2. Notes from 4/26 & 4/27:
“Looking at the stocks that I have left over from yesterday, DKNG looks like the best option. On the daily chart, there’s a nice tight base that has formed over the last 3 days; and looking at the 4h chart, there’s a solid bear rally that’s formed and price is pushing down again today. Looking at the hourly chart, there was a nice 10-candle rally before a drop this morning; the next candle tried to rally a bit but is pushing down as well. I like this short, the question now is where do I get in. I could get in at the day’s lows which is just above the bottom before the rally (with the intention of getting in at a better price) or I could get in at the lows of the base for a more confirmed move. After talking it through here, I’m going to wait for the confirmed move (well put an entry order in at a break of the base) and set an entry order if the numbers match up
The R:R of a straight stock play was only 1.2, but I still like this pushing down if it breaks support, so I bought an option. I simply followed my rule of making sure break even was within my target, and set it to not trigger until price hits $13.65. Hopefully it triggers.”
“Lastly, before I look for new opportunities this morning, I set the entry order I had yesterday in DKNG again this morning. So far it hasn’t triggered, but when I looked, it’s still basing, so I’m comfortable with it.
Underlying Price – $13.65
Underlying Target – $12.00
Strike Price – $13.50
Premium – $1.35
Price pushed down, through the price I wanted to get into this at, but my order didn’t trigger. I looked and the price of the option was higher than the limit price I had, so it didn’t get filled. I canceled that order and entered another for the same option (same strike, expiration) for ~$0.10 more than I was looking at yesterday, but that’s not bad. I still wanted to be in.”
Entry – $1.45
Updating on 5/6 – Exit – 5/3 @ $0.79
This looked decent immediately after getting into the trade and even the next day when there was a bit of a retest and more downward movement. Unfortunately, though, the price of my option never go up to .5R, so I wasn’t able to move my stop (or enter a trailing stop). After that, price pushed back into the range it was in before the break I traded, and over the course of the days after that, continued to rally.
Eventually, it got up to a resistance area that was prior support, and I took that break as my cue to get out of the trade; which I did for a .66R loss. I can’t say I hate the trade, It broke support and had room to run, but rallied instead (seemingly to me). I guess earnings were today, so maybe the rally was pricing in earnings? Could be the case especially since price is down a lot today, at levels where I entered this trade initially.
The only call out I have here is to pay more attention to earnings, because outside of that I feel like I did all the things I was supposed to do for a “good” trade.