Last week, I executed three Weekend trades related to the shift to a stay-at-home life-style.
These results are based off 10 contracts per trade.
*Verified Returns of The Weekend Trade.
Peloton was our big winner this week, with 101% return!
Here is what my trade entry looked like: PTON 9/11/20 $85 call below $7.50.
This was a play on the recent surge in sales as people have searched for alternative ways to exercise during lockdown. Technical analysis showed this stock trading at the top of its valuation range until it fell heavily on Thursday, giving it room to run up.
I used a calendar spread in order to gain better entry on this trade.
Our weekly ‘Bonus Play’ was leading up to WORK earnings run-up, exiting on Monday. WORK rose above 30$ per share in anticipation of its earnings report, but quickly fell in value and lost over $10 per share after it’s earnings report.
We were able to exit with a 20% return on the bonus trade by setting limit orders that automatically executed when the profit target was reached.
Limit orders are a great way to manage trade exiting without having to worry about taking profits at the right time.
The Week of September 7, 2020
What a week! We saw the level of volatility that can happen in a heavily traded market like this one. After returning over 5% from the market wide correction that was over 10% down, many tech companies fell again to just above the lows of the previous week. Everyone was panicking, and the FED was not around to save anyone. The FED beige book indicated that they significantly decreased their bond purchasing in the most recent US treasury auction. This is a shift away from what the FED has recently indicated their purchasing plan would be, and for the first time since the pandemic their balance sheet has decreased. This creates a bearish stance for the stock market, because it means the FED is reducing their quantitative easing, however purchasing could resume at any time, leaving fewer alternatives for investment away from stocks. In addition, weekly jobless claims fell again below 1mm, which may allow the FED to continue reducing their purchases.
Fear reigned in the market this week. Large swings up and down as traders attempted to time the bottom of the market, creating what is known as a ‘dead cat bounce’, which is only fun if you really hate cats! This increase in volatility was indicated by the VIX^. I’m not talking about the vapor rub, but the CBOE’s measurement of volatility based around option purchasing. The spike in volatility has trailed off, but large price swings could continue next week, and limit sell orders should be used to ensure trade exit. The S&P 500 has closed with gains 1 out of the last 5 trading days, and the other 4 days, traders everywhere were screaming at their computer screens.
This isn’t financial advice, but opinions on trade opportunities for educational purposes.
REMEMBER to only open positions that fit within your own personal risk tolerance, and NEVER ‘CHASE’ trades that you missed a good entry or exit on. There will be another opportunity for you just around the corner.
Photo Credit: boredpanda.com, TheWallStreetJournal.com, Chewy.com, Peloton.com, Lululemon.com