Market Curiosity: Exploring Markets And Systems

June 1, 2011

Long APKT June 70 puts for 1.70 and LULU June 87.5 puts for 3.98 (update 1, June 4) -3%, +3%

Filed under: +0 to +5%, -0 to -4%, Long Puts — Tags: , — Jeff Fitzmyers @ 10:43 pm

Game plan: If stocks gap down and start to rise above yesterday’s lows, or open up and keep going up, sell. Otherwise hold.

I usually don’t buy puts near the end of a big down day, but there seemed to be a good chance of at least temporary follow through.

– Today’s bar broke out and then failed and undercut yesterday’s almost hammer low.
– RSI > 70 on monthly timeframe. Also > 70 on the weekly a few months ago (often there is a lag). Those alone suggest a trip to the weekly magenta EMA at some point.

+ On both these charts, if prices really are headed down, the weekly CCI magenta line will get below -100 and price will could drop 15-20 points in a week. That reward is why I took the risk.
– But since the options expire soon, price has to move down quickly or it’s time to be out.
– Both stocks did not have huge volume today. So possibly they declined not so much due to selling, but a lack of buying?? I’m hoping the selling kicks in soon 🙂

June 4: Closed both positions on Thursday when LULU rose quickly intraday. And APKT was not even going down. Basically I shorted at the incorrect time as mentioned in this update.

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