Tuesday's trade plans

Good morning,

U.S. stock futures are green across the board Tuesday morning ahead of CPI at 8:30 am ET. Last CPI read moved the market lower but keep in mind that was just before Nvidia’s earnings which I believe played a bigger role. What I mean is the market was nervous about Nvidia’s nonstop ascent and was looking for a reason to sell at the time. With little chance, +/- 5%, of rates coming down at the Fed meeting next week a hot CPI read could cause a morning dip but I don’t see it lasting longer than half the day. Conversely, a favorable CPI would increase chances of rates coming down headed into the summer. Ultimately rates are coming down sooner versus later, so regardless of CPI and PPI Tuesday and Wednesday, all else being equal, market dips will continue to get bought. 

Monday I closed 3 wins which can be seen in the trade journal. 

This brings the win streak to 27.

Headed into Tuesday’s session I’m in 3 swing trades. NVDA and TSLA bull puts expire this Friday while META expires next Friday. 

Chat room

Journal

Cheat sheet

I anticipate starting another $2,000 balance on April 1. 

Friday I entered NVDA as it was selling off. I used the 10-day EMA as my support. Monday NVDA closed the cash session at $857 and climbed $9 to $866 in the aftermarket. This leaves my -$850 / +$840 short put vertical spread for $3.40 credit in a favorable position with 4-days to expiration. I invested $3,300 and can make as much as $1,700 if NVDA is above $850 Friday at the close. 

Monday I entered META twice. Shares were down over 2 ATR and I saw that as a gift on this monster earnings winner. I used the Keltner Channel mean as my reference point for the spread and started shooting. First with the -$485 / +$475 short put vertical spread for next Friday’s expiration and second with the -$477.50 / +$467.50 for this Friday. When shares bounced to $480’s I closed the second entry +27% +$460. META closed Monday at $483 and climbed $4 in the aftermarket to $487, above my sold -$485 sold strike. A sharp drop like META had from above the 10-day EMA down to the Keltner Channel mean is not common and because it’s #2 on my watchlist I knew exactly what to do when I saw it down over $30 Monday morning. 

TSLA is the only name I’ve been trading that’s not an earnings winner. High interest rates are hurting consumers' ability to buy more expensive cars due to higher monthly payments. This in turn causes Tesla to lower prices and therefore decrease their margins. That said, rates are coming down soon and the market will start to price that into Tesla’s ability to move units. I like short put vertical spreads on TSLA when oversold patterns emerge, like this rounding bottom. I went with the -$177.50 / +$172.50 short put vertical spread for $1.73 credit expiring this Friday. TSLA closed the cash session at $177 and aftermarket at $178, above my sold strike. As you can see on the chart it rejected the 10-day EMA both Friday and Monday. The stock will need to get back above the 10-day EMA soon to establish an uptrend, otherwise a rounding bottom can turn into a bear flag, so keep an eye on that. 

Videos:

Mission Statement (20:55)

• Workshop 1 (12 videos)

• Workshop 2 (8 videos)

On-demand core concepts:

• Overview (50:06)

• 7 selling advantages (41:45)

• 10-day EMA (46:28)

• Refresher course (1:06:05)

• Stop loss strategy (50:12)

• Keltner Channels (37:29)

• Bear call spreads (1:33:42)

On-demand short video lessons:

• Bull puts (11:58)

• Margin (08:34)

• thinkorswim APP (07:36)

• Earnings winners and 10-day EMA (12:07)

Books:

Trading In The Zone by Mark Douglas

I recommend reading this a few times. Of particular importance to Journey are the:

• The traders edge, pages 101 - 106

• Eliminating the emotional risks, pages 120-135

• Exercise, pages 189-201

The Complete Guidance To Options Selling by Cordier and Gross 

I recommend 2 sections in this book:

• Part I, pages 7-79

• Vertical spreads, pages 151-155

The Unlucky Investor’s Guide To Options Trading by Julia Spina

I recommend reading the:

• Introduction starting on page 1

• And chapter 3 trading short premium, pages 57-83

Stock selection:

• Tickers: best co’s in world, earnings winners, strong guidance

• Order type: bull put a.k.a. Short put vertical spread (neutral to bullish i.e. good co’s tend to go up)

• Target entry: 1-2 strikes below price and defined by 10-day EMA and Keltner Channel technical analysis (sell below big support to boost odds)

• Entry (credit) goal: 30% of the spread width i.e. $10 wide = $3, $5 wide = $1.50, $2.50 wide = $.75

• Exit (debit) goal: 30% if achieved on day 1-2, otherwise 50% of the credit by the halfway point of the trade

• Stop loss strategy: double the credit so on a $10 wide, entry is $3, stop loss is $6

• Allocation: starts at 100% and works through 5 benchmarks to diversify risk as the account grows

• Expiry: 5-7 days from expiration (fastest rate of option decay)

Find out more → https://join.ragingbull.com/small-account-journey

Eat, sleep & trade!

Jason Bond

I want to start by pointing out that I cannot speak for my members’ performance, as results may not be typical and trading is HARD. And I cannot guarantee you will make money, but what I can guarantee is that I will work my BUTT OFF to teach you WHY I trade WHAT I trade.

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