JWN Bearish inclined naked calls 14 Oct expiry
Updated
Whats The Plan/Trade/Thought
- JWN seems like a good candidate to sell calls especially since they had a huge 16% gap down after their earnings on the 16 Aug
- My hypothesis is that there will be a continued bearish price movement below S&R 19.26. Encouraged by the broader market movement and retail’s tightening
- Despite the Fed’s action, the latest reports still see a rising CPI and Core inflation numbers. If the effects are not yet felt by the consumers this will catch up soon
- JWN has a S&R line on 19.26 and so far it seems to be holding out
Risk Mitigation - 21.72 is a Trade Risk Point where the recent gap would be filled and a full reversal is confirmed
- 19.26 is an S&R line and if it holds out it confirms the new bearish price direction
Imagine Yourself Taking The Other Side - With the huge 17% bearish gap, I don’t think it is a good risk to be bullish on this stock. Especially with the bear market stance
Look For New Information - No new information
How Do I Feel Now - I would have preferred to sell at the strike of 23 but the price provided was not conducive. I bought this at 22.5 as if my hypothesis of a continued bearish price direction at S&R 19.26 holds, we should be ok.
Trade Specs - Sold 410 Calls @ 0.15
- Strike: 22.5
- % to Strike: 22.73%
- BP Used: 77k
- Max Gain: 6150
Trade closed: target reached
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.