WM MAR10 150/FFEB17 145 DIAGONAL PUT
Updated
Bear Rally:
I've had WM on my watch list since it made a new swing low Friday, January 20th. The stock is also trading below a falling 50-day SMA. As I had this on my watch list, I was thinking this would be a low base set up, but evolved to a small bear rally with lower or equal volume running up to the 20 day or previous support/resistance at 154.35. The candle stick on the 30th could have been used as the reversal candle for the bear rally. I had to wait to get in because earnings were due out the 31st. With it gapping down and traded below the swing low, I decided to get into my strategy today.
Diagonal Spread Strategy:
Since about mid August, WM has had a bearish outlook and based on this trend, it's probably that this will continue a slow grind lower.
I drew a couple lines from the August 22' high on the hour chart and identified a channel I wanted to play. Plan A would be hitting my target of 145 by the 17th or being below it by the 17th. I was thinking of picking up the 17 March 150 stikes, but I didn't like the spreads. March 10th should be more than enough time to get to 145. Actually, I prefer my 145 strike to expire worthless and manage my 150 strike until the 10th.
Position management strategies when the stock goes lower
If this goes below my 145 target before the 17th and stays below it by the 17th, I'll close the entire combo out.
Position management strategies when the stock goes sideways
If this goes sideways, I'll let my 145 strike expire worthless and hang on to my 150 strike until the 10th. Either way, I'm set up for max loss risking less than 2% of my portfolio.
Position management strategies when the stock goes higher
If this goes higher, I'm set up for max loss so I'll move on to my next trade.
Position management strategy at expiration
Come expiration, if this is at or below my 145 target, I'll close out the entire combo. If not I'll hang on to my 150 strike, and once it hits my 145 target, I'll close it out even if it gets there before the March 10th expiration.
I've had WM on my watch list since it made a new swing low Friday, January 20th. The stock is also trading below a falling 50-day SMA. As I had this on my watch list, I was thinking this would be a low base set up, but evolved to a small bear rally with lower or equal volume running up to the 20 day or previous support/resistance at 154.35. The candle stick on the 30th could have been used as the reversal candle for the bear rally. I had to wait to get in because earnings were due out the 31st. With it gapping down and traded below the swing low, I decided to get into my strategy today.
Diagonal Spread Strategy:
Since about mid August, WM has had a bearish outlook and based on this trend, it's probably that this will continue a slow grind lower.
Position management strategies when the stock goes lower
If this goes below my 145 target before the 17th and stays below it by the 17th, I'll close the entire combo out.
Position management strategies when the stock goes sideways
If this goes sideways, I'll let my 145 strike expire worthless and hang on to my 150 strike until the 10th. Either way, I'm set up for max loss risking less than 2% of my portfolio.
Position management strategies when the stock goes higher
If this goes higher, I'm set up for max loss so I'll move on to my next trade.
Position management strategy at expiration
Come expiration, if this is at or below my 145 target, I'll close out the entire combo. If not I'll hang on to my 150 strike, and once it hits my 145 target, I'll close it out even if it gets there before the March 10th expiration.
Trade active
Note
Going to let me 145 strike expire worthless and hang on to my 150 strike.
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.