24 Nov

šŸ¤‘ AMZN: How I Locked In A $1K Winner

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Weā€™ve seen a lot of high-dollar stocks take off recently and if you ever thought about trading these expensive namesā€¦

Listen up. 

I want to show you an alternative that allows me to take advantage of these stocks without breaking the bank.

 

 

If you donā€™t know what Iā€™m referring to ā€” itā€™s options, and I want to show you how I trade them with a real-money case study.*

Donā€™t worry, Iā€™m not going to be talking about anything complex here.

I just want to show you how I pair chart patterns and utilize options to express my opinionā€¦

And why I think it can help you become a better trader.

 

[Case Study] Why Itā€™s Important To Aim For Base Hits

On Friday at 11:33 AM ET, hereā€™s what I sent out to subscribers.

AMZN bull puts. sold 3130 / 3100 vertical put spread for 14.40. risking 7,800 to try and make 7200 max, goal is 50% of the 7200

I adjusted my order some because i couldnā€™t fill the advance notice range i sent out earlier via the RagingBull APP but same trade really.

 

 

Hereā€™s a look at the daily chart in AMZN (as of Nov. 20, the day I got into the trade).

 

 

AMZN was right near the 89-day exponential moving average (EMA), and it looked as if that would hold as support.

Now, I was actually bullish on AMZN, so instead of purchasing shares at such a hefty price tagā€¦

I decided to sell the $3130 / $3100 put spread expiring on Nov. 27.

So this meanst if AMZN stays above $3130 on expiration, I would collect all the premium. The best part is I didnā€™t really need AMZN to explode higher.

I just needed the stock to get above $3130 and stay there. Of course, with this trade, I donā€™t have to hold onto it, and I can get out whenever I want really.

 

 

Now, on Tuesday at 9:02 AM ET, hereā€™s what I sent out.

I intend to manage this position today meaning if itā€™s not above my $3130 / $3100 spread Iā€™ll take a small loss. What I donā€™t want to do is ride this, between strikes (currently $3110) into Wednesday, get caught in a gap down on the QQQ and be at max loss here ā€˜hopingā€™ the market reverses. Basically I need some breathing room today or Iā€™m playing defense. See how itā€™s just starting to get under the trendline Iā€™d be referencing? Needs to get back above that today for me to consider holding.

 

 

When it comes to these plays, itā€™s important to manage risk and thatā€™s what I did here. When I saw I was actually up money on the trade in the afternoon, I locked in my gains. I believe it was a prudent action to take.

You see, weā€™re heading into a holiday, and since the market is extendedā€¦ I wouldnā€™t be surprised if thereā€™s a pullback in some of these names.

Notice how I just spotted what I believe to be a simple chart setup. I found an area I believe AMZN can stay above and used options to execute my stance on the stock.

Right now, Iā€™ve found pattern recognition to be most beneficial to my trading.

If you want to learn my three favorite chart patterns and how I use them to attack the marketā€¦ then youā€™ll want to attend this training session here. 

Youā€™ll discover how chart patterns can make you a better trader and why itā€™s important to focus on price action.

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