DISH LONG with a pretty low down side. After 2 "not so good" earnings this is the time to prepare for the Q4 earning,
I expect some bullish momentum to close the recent gap,
Risk reward is 4 to 1 and the stop order is pretty close (analyzed with VIPER indicator).
Good Luck.
DISH
DISH NETWORK 1D TRIANGLE BREAKOUTTriangles, Descending Triangles, Ascending Triangle and Ranges are repeatable trading chart patterns.
Triangles and ranges are consolidation chart patterns that can breakout either direction.
Ascending and descending chart patterns will have a directional bias depending on the previous incoming trend.
Each chart pattern will have defining trendlines of the support/resistance levels creating the pattern.
What ever time frame you are trading this chart pattern, wait for a candle close outside of the trendline in the direction of the breakout candle. (Our time frame preference is the Daily chart ).
Add volume indicator - Volume is the amount of $ that went into a particular candle or in Forex the # of trades that took place.
Add ATR indicator - Volatility is the amount of price movement that occurred. Use the ATR to measure the price movement.
When you see descending Volume bars and descending ATR line (which indicates volatility ) this shows a dis-interest in traders to invest in this pair creating consolidation which creates the chart pattern.
Trade Management after there is a breakout candle close.
1 - Position size (compare volume bar to volume ma line).
a - Breakout candle must be 100% of average volume for a full position size.
b - If 75% of average volume then ½ position size. (To find 75% of Volume
look at the volume settings on the chart – divide smaller # into larger # = 75%+)
2 - Enter two trades.
3 - SL for both trades will be 1.5 x ATR.
4 - 1st trade TP will be 1 x ATR.
5 - No TP on 2nd trade – letting profit run and adjusting SL to follow price.
6 - When 1st TP hit – move 2nd trade SL to breakeven.
7 - Adjust the 2nd trade SL to follow price.
*8 – After Breakout candle – if price closes back into chart pattern close trade
*9 - When breakout candle is more than 1 ATR from breakout candle open.
a - Enter 1st trade at candle close with ½ position size.
b - Enter 2nd trade with a pending limit order that is 1 ATR of breakout candle open.
c – Price should pullback to that pending limit order for 2nd trade.
d – If Price returns back into chart pattern close trade before SL is hit.
DISH 1D RANGE TRADESRanges, Triangles, Descending Triangles, & Ascending Triangle are repeatable trading chart patterns.
Triangles and ranges are consolidation chart patterns that can breakout either direction.
Ascending and descending chart patterns will have a directional bias depending on the previous incoming trend.
Each chart pattern will have defining trendlines of the support/resistance levels creating the pattern.
What ever time frame you are trading this chart pattern, wait for a candle close outside of the trendline in the direction of the breakout candle. (Our time frame preference is the Daily chart ).
Add volume indicator - Volume is the amount of $ that went into a particular candle or in Forex the # of trades that took place.
Add ATR indicator - Volatility is the amount of price movement that occurred. Use the ATR to measure the price movement.
When you see descending Volume bars and descending ATR line (which indicates volatility ) this shows
a dis-interest in traders to invest in this pair creating consolidation which creates the chart pattern.
Trade Management after there is a breakout candle close.
1 - Position size (compare volume bar to volume ma line).
a - Breakout candle must be 100% of average volume for a full position size.
b - If 75% of average volume then ½ position size. (To find 75% of Volume
look at the charts volume settings – divide smaller # into larger # = 75%+)
2 - Enter two trades.
3 - SL for both trades will be 1.5 x ATR.
4 - 1st trade TP will be 1 x ATR.
5 - No TP on 2nd trade – letting profit run and adjusting SL to follow price.
6 - When 1st TP hit – move 2nd trade SL to breakeven.
7 - Adjust the 2nd trade SL to follow price.
*8 – After Breakout candle – if price closes back into chart pattern close trade
*9 - When breakout candle is more than 1 ATR from breakout candle open.
a - Enter 1st trade at candle close with ½ position size.
b - Enter 2nd trade with a pending limit order that is 1 ATR of breakout candle open.
c – Price should pullback to that pending limit order for 2nd trade.
d – If Price returns back into chart pattern close trade before SL is hit.
$DISH LT Head & Shoulders - Unusual Options Activity$DISH Dish Network Corp -
Possible long term head and shoulders formation on weekly chart. Based on Fibonacci levels, long term target $14.50 by July 2019.
Bearish unusual options activity today -
- 5.4k $22.50 strike (OTM) Jan'2020 puts traded today for total premium of $2.5M against OI of 2,685 contracts.
- 13.3k $17.50 strike (OTM) Jun'2019 puts traded today for total premium of $2.1M against OI of only 874 contracts.
Note: Informational analysis, not investment advice.
TRADING IDEA: TWO BULLISH ASSUMPTION PLAYS IN DISHDISH announces earnings on Tuesday before market open and is a state of high volatility (>50%). While you can naturally go with the plain Jane volatility contraction play around earnings (short strangle), there might be an opportunity here to catch it at significant lows while simultaneously taking advantage of risk premium present here which will lower your cost basis out of the gate.
The "Wheel of Fortune" Short Put
Sell the June 15th 32.5 Put (Neutral to Bullish Assumption)
Metrics:
Probability of Profit: 64%
Max Profit: 1.60/contract
Buying Power Effect: 30.90 (cash secured); 6.18 (on margin)
Break Even: 30.90
Notes: Look to either take profit at 50% max or run the contract all the way to expiry. If assigned, immediately proceed to cover at or above your cost basis (i.e., sell calls with strikes above 30.90). Proceed to work it as you would any other covered call. To bring in buying power effect somewhat, you can buy the throwaway 25 long for .15, which reduces the buying power effect to 6.05 in a cash secured environment (and reduces the credit received to 1.45 and changes your break even to 31.05); there isn't much advantage to doing that if on margin.
The natural alternative is to roll the broken short put out "as is" for duration and additional credit before taking assignment. Assuming you can get a decent credit to do that, this is usually to your advantage somewhat, since taking on stock is more buying power intensive than naked short putting on margin or uber wide long put vertical in a cash secured environment. In the latter case, you'll have to re-up on buying a throwaway long before rolling out the short to keep the buying power effect in check.
Synthetic Covered Call (Neutral to Bullish Assumption, But More Bullish than the Wheel of Fortune)
Sell the June 15th 35 put
Probability of Profit: 56%
Max Profit: 2.95/contract
Max Loss/Buying Power Effect: 32.05 (cash secured); 6.41 (on margin).
Break Even: 32.05
Notes: Look to take profit at 50% max or do the same thing as you would with the Wheel of Fortune trade, albeit with a less favorable break even. Consequently, it's a slightly more bullish play since you need price to stay above your break even (32.05). Buying the 25 strike throwaway long brings in the buying power effect to 7.07 in a cash secured environment.
* * *
I also looked at doing a Poor Man's Covered Call, but it doesn't look like that would be a more capital efficient setup (at least when I priced it out during off hours) than naked short putting on margin or going uber wide short put vert to bring in buying power effect in cash secured. Preliminarily, a 90/30 June/Sept Poor Man's, which would involve buying the Sept 20 long and selling the June 15th 37.5 short, would cost 13.40 to put on.
THE WEEK AHEAD: DIS, AKS, P, TSLA, TWTR, X, MU, DISHWith most of the earnings heavy hitters in the rear view mirror, there isn't much to trade this week of quality from an earnings announcement volatility contraction standpoint, with DIS being the standout name.
DIS announces on Tuesday after market close with a 30-day implied volatility of 25%, which is in the upper half of its 52-week range. The May 18th 96/97 16 delta short strangle pays .97 with a 75% probably of profit, which isn't horrible, but I'd rather have a background implied above 50%.
One underlying that I don't usually trade earnings that caught my eye, however, was DISH, with an implied of >50%, which is at the top end of its 52-week range. It announces earnings on Tuesday before market open. You can naturally play it for earnings-related vol contraction (the May 18th 20-delta 30.5/37.5 short strangle's paying .88), but the chart may suggest taking a directional shot instead. I'll set out several bullish assumption plays in a separate post that would take advantage of its "being on its butt-dom."
On the slip side of the coin, there are several individual names that have that ~50% metric I'm looking for that have already announced and that may be worth nondirectional plays that are just as -- if not more productive -- than the Disney earnings play if set up in the June monthly. Here they are, ranked by their 30-day implied volatility percentages: AKS (65.5) (straddle), P (59.2) (straddle), TSLA (53.9) (strangle), TWTR (49.5) (strangle), X (48.6) (strangle), and MU (47) (strangle).*
On the exchange-traded fund front, not much is attractive, having all fallen below 35% 30-day implied: XOP (29.3), EWZ (28.5), SMH (26.9), EWW (24.9), FXI (22.8), so I'm unlikely to consider putting on a play in one of those unless something substantially changes as the week evolves. Moreover, my tendency is to set those up in the monthlies nearest 45 days until expiration and June (40 days 'til) is starting to "fall out of that window," with July (75 days 'til) being too far out in time.
* -- You can naturally consider going defined risk with some of these, using iron flies instead of naked short straddles; iron condors instead of short strangles.
DISH looks good on technicalsDISH is touching 200 DMA, a support level from 2004 and MACD and RSI look as if they are turning around
SHORTING OPPORTUNITY ON DISH Dish is in a down trend seems to have formed a bear flag and would be a good short on the breakout. Bearish volume is picking up and price is hitting strong resistance. Momentum seems bullish however so I would only short on the breakout or just short lightly.
Long on DishTVDish TV seems to have broken out of a consolidation. One can wait for a pullback and then go long.
