I just joined today and looked at this write up. Looking at the stock today, it is near $55. Talk about timing and seeing things in action. Question on the 200 EMA. I read in a different writeup to not trade below this level? Did I misunderstand? I ask since the COHR is about to hit the 200 EMA on the way up to $55. Aside from that, wow!
Hey mark, the emas are for short term trading. They’re more barometers of strength. I use the 8/10/21 for that. For longer term moves you would use the 200 dma or sma. Ya this trade was crazy on point when they bought those the last 2 weeks. One of the most perfect ones I’ve ever noted
Thanks. I'm excited to read more after this one. Lol. Thanks for the clarification I thought the same after posting (long vs short). But It makes sense in how to look at these in terms of support resistance, volume etc.
Thanks James, an interesting idea. Do the indicators on the daily chart cause you any concern - the RSI seems in overbought territory and MACD curling down? Given their recent (not insignificant) miss in earnings, I think I am interested in buying the calls so as as to have risk capped to premium paid. Just trying to learn the process, grateful for your feedback on my thoughts
While the RSI on the daily is elevated, it's not overbought, you would say overbought is well over the top. Look at the Tesla daily RSI for reference.
The reason I suggested the risk reversal is you're putting the trade on for free. By selling the $30 puts and using the proceeds to buy calls you are paying nothing for the trade. The $28 level was a huge reversal level and I would expect it to be so going forward. Look at the volume. Every trades objective is to net the most with the least risk, buying calls, those could go to $0. By using a risk reversal, you're investing nothing, but taking an obligation to buy a quality name at a level that's been support.
Your thinking is clearer than mine, unsurprisingly. I am getting myself to move focus away from the fundamentals as you rightly suggest. However I fear there is complacency building in the market with VIX sub 14, and the loss on those short puts could grow quickly if the underlying starts to drop towards that gap. I am focusing on that whilst keeping in mind that the risk on calls are capped. Recent options flow you highlighted suggests the opposite direction is more likely ofc
Of course if the VIX spikes those puts would rise in value. I wouldn't lever up. Just what you would want cash secured. There is a time to use leverage in regards to put selling and it's not with the VIX at 13.xx. In that regard you are right. Of course you can just outright buy calls, I just like to have the trade in a name like this be paid for .
Thanks for the info. Enjoy your break JB it's well deserved.
I just joined today and looked at this write up. Looking at the stock today, it is near $55. Talk about timing and seeing things in action. Question on the 200 EMA. I read in a different writeup to not trade below this level? Did I misunderstand? I ask since the COHR is about to hit the 200 EMA on the way up to $55. Aside from that, wow!
Hey mark, the emas are for short term trading. They’re more barometers of strength. I use the 8/10/21 for that. For longer term moves you would use the 200 dma or sma. Ya this trade was crazy on point when they bought those the last 2 weeks. One of the most perfect ones I’ve ever noted
Thanks. I'm excited to read more after this one. Lol. Thanks for the clarification I thought the same after posting (long vs short). But It makes sense in how to look at these in terms of support resistance, volume etc.
Have a great weekend!
You as well! Enjoy the summer!
Thanks James, an interesting idea. Do the indicators on the daily chart cause you any concern - the RSI seems in overbought territory and MACD curling down? Given their recent (not insignificant) miss in earnings, I think I am interested in buying the calls so as as to have risk capped to premium paid. Just trying to learn the process, grateful for your feedback on my thoughts
While the RSI on the daily is elevated, it's not overbought, you would say overbought is well over the top. Look at the Tesla daily RSI for reference.
The reason I suggested the risk reversal is you're putting the trade on for free. By selling the $30 puts and using the proceeds to buy calls you are paying nothing for the trade. The $28 level was a huge reversal level and I would expect it to be so going forward. Look at the volume. Every trades objective is to net the most with the least risk, buying calls, those could go to $0. By using a risk reversal, you're investing nothing, but taking an obligation to buy a quality name at a level that's been support.
Your thinking is clearer than mine, unsurprisingly. I am getting myself to move focus away from the fundamentals as you rightly suggest. However I fear there is complacency building in the market with VIX sub 14, and the loss on those short puts could grow quickly if the underlying starts to drop towards that gap. I am focusing on that whilst keeping in mind that the risk on calls are capped. Recent options flow you highlighted suggests the opposite direction is more likely ofc
Of course if the VIX spikes those puts would rise in value. I wouldn't lever up. Just what you would want cash secured. There is a time to use leverage in regards to put selling and it's not with the VIX at 13.xx. In that regard you are right. Of course you can just outright buy calls, I just like to have the trade in a name like this be paid for .
Good work James and thank you.