Low risk options trade - Buy FB 210 puts, 1/31 expiry
Enter trade between 1/14-1/15. Please see the chart annotation, which provides notes on trade setup and trading plan. I bought these puts for $2.67 on Jan. 13. Will hold puts for $215 target as long as stock closes back below yellow trend line on chart, or until my stop loss is triggered. FB earnings are at the end of this month. I am expecting a pullback due to profit taking, and also higher implied volatility will increase option price. My stop loss at $2.30 provides very low risk since I bought puts at trend line resistance and do not expect it to go much higher. Your option entry and stop prices will differ from mine. Structure your exits to keep risk low. If stock runs up then candle will close over trend line, exit your trade and loss will be small.
Trade active
On Jan. 16, my put was near $2.30, but I kept my position open because I have only a few contracts. I believe my setup is sound and therefore having a small trade size allows me to be comfortable holding this position. Also IV will increase next week, which will benefit my position.Trade active
Today the stock finally is dropping after exhausting itself at the daily uptrendline resistance (see chart). First target is 10day SMA at 219, which it has almost touched, and then there is a lower uptrend support line (daily) around 216.10. Also note the IV for the 1/31 week has increased, which raises options prices. If you went long puts send me a comment.Trade active
If you have confidence in your trade setup, then it is much easier to hold a losing options position with fewer contracts (relative to principal). FB stock has held near the yellow resistance line much longer than I expected and so theta decay made it difficult to profit last week. IV will rise more this week and if there is a sell off I will take the profit and close position before earnings.Trade active
Yesterday I had about 50% profit but decided to hold position because FB is below my daily support line. Look at 30min chart and you see it is still below a strongly downtrending 20sma. Limit sell order at $6.00 entered, based on stock price $210.50-$210 and IV increasing a few points.Trade active
On the daily and 30m chart you can see that FB started moving up on the 28th and neared the yellow resistance line on the 29th. I did sell most puts for about 40% profit. I held one option on 29th; it was at a 50% loss by the end of the day. This is why position size matters. I was willing to hold one contract through earnings, which means a risk of $267 in principal.Trade closed manually
Closed last put at the open today for $4.50 (bought at $2.67).
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.