ZM 27 JAN 68/70/72 BUTTERFLY
Updated
SIDEWAYS SET UP:
Detailed Definition of setup and what market conditions are desirable:
Since January 9th ZM has been in a sideways set up with no real trend making relatively equal highs (72.16)/lows (67.67) and a flattening 20-day & 50-day SMA's.
Detailed Definition of the trigger (entry point) used to enter positions
I'll be using timeframe as a trigger, not stock price. I'm giving this until Jan. 27th targeting 70.
Detailed Definition used to determine Stops (abandon or adjust)
No stops. I'll be set up for max loss.
Detailed definition of setup and desirable market/sector conditions
Communication Services sector has a +2 outlook, however, the stock is not in a strong rally or pull back with stable volume in the sideways channel.
Detailed definition of charting criteria needed to enter positions
Because there is stable volume and it's been consolidating the last few days, charting criteria checks off with my theory.
How strike prices and expiration dates are selected
If you take a look at the the daily chart, I'm using the body of the candle that was established on Jan 9th as an anchor. So this is how 70 was determined for the target. On the hour chart, you'll see a more defined channel ranging from 72.16 and 67.67.
Position management strategies when the stock goes lower
If this goes lower I'm set up for max loss and I'll move on to my next trade.
Position management strategies when the stock goes sideways
If this trades at 70 by this Friday, I will close out the entire combo and take profits. The yellow downtrend line is draw on my daily chart from the ATH and touches the high on August 5th 2021. If this stays at 70 on the hour chart, it should touch the yellow trend line by Jan 18th which I would expect some reaction maybe. This is another reason why I put this out until the 27th. Now, when this IPO'd back in 2019, it was right in this area which is part of another reason why I think it'll continue to trade in this range until next earnings which is scheduled until end of February.
Position management strategies when the stock goes higher
If this goes higher, I'll be set up for max loss and I'll move on to the next trade.
Position management strategy at expiration
In the event that this is not trading at 70 by this Friday, I will hold this until expiration to see if it'll come back into the apex of the trade. Either way, I will update my notes here as the trade unfolds.
Detailed Definition of setup and what market conditions are desirable:
Since January 9th ZM has been in a sideways set up with no real trend making relatively equal highs (72.16)/lows (67.67) and a flattening 20-day & 50-day SMA's.
Detailed Definition of the trigger (entry point) used to enter positions
I'll be using timeframe as a trigger, not stock price. I'm giving this until Jan. 27th targeting 70.
Detailed Definition used to determine Stops (abandon or adjust)
No stops. I'll be set up for max loss.
Detailed definition of setup and desirable market/sector conditions
Communication Services sector has a +2 outlook, however, the stock is not in a strong rally or pull back with stable volume in the sideways channel.
Detailed definition of charting criteria needed to enter positions
Because there is stable volume and it's been consolidating the last few days, charting criteria checks off with my theory.
How strike prices and expiration dates are selected
If you take a look at the the daily chart, I'm using the body of the candle that was established on Jan 9th as an anchor. So this is how 70 was determined for the target. On the hour chart, you'll see a more defined channel ranging from 72.16 and 67.67.
Position management strategies when the stock goes lower
If this goes lower I'm set up for max loss and I'll move on to my next trade.
Position management strategies when the stock goes sideways
If this trades at 70 by this Friday, I will close out the entire combo and take profits. The yellow downtrend line is draw on my daily chart from the ATH and touches the high on August 5th 2021. If this stays at 70 on the hour chart, it should touch the yellow trend line by Jan 18th which I would expect some reaction maybe. This is another reason why I put this out until the 27th. Now, when this IPO'd back in 2019, it was right in this area which is part of another reason why I think it'll continue to trade in this range until next earnings which is scheduled until end of February.
Position management strategies when the stock goes higher
If this goes higher, I'll be set up for max loss and I'll move on to the next trade.
Position management strategy at expiration
In the event that this is not trading at 70 by this Friday, I will hold this until expiration to see if it'll come back into the apex of the trade. Either way, I will update my notes here as the trade unfolds.
Note
I put my bid in.Trade active
Note
Keeping an eye on this on the hour chart. 4 hour chart is more bullish. Let's where it ends up today. Might want to give this a couple more days before I close this out.Note
Going to see if this comes back down to 70 by today. If it does I'll close it out.Note
Volume stable. Looking like I'll probably close this tomorrow morning to give it more time to land into the apex of this trade.Note
On the hour chart there's a gap between 69.92 and 69.45. And then 68.91 and 69.65. So if this closes above my 70 target today, I would want to see a gap down tomorrow to fill those gaps which should bring it back into the apex of the trade on expiration. Let's see what happens.Note
2.95 ATR. Closing this out this morning.Trade closed manually
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