Position: - Looking at long dated call options (Jan 15th 2021) - $15 strike (ITM, gives some degree of protection against theta decay) - Cost (approximately $460/ contract, at current mid bid and ask, willing to go as high as $5.00) - 0.72 Delta (ITM) - Running 2x contracts (allows us to sell one on the way up, also makes a more meaningful position size)
Profit Target/ Exit: - looking for mean reversion to allow us to sell half to have a riskless trade, this would require a move to around the $22.50 - $23.00 range - Given the fact the position is a long-dated option, we will not run a technical stop, instead we will let the position run and check to see if it performers or not (i.e. no point running a 50% stop and getting stopped out, 1 month into a 12 month contract).
Rationale: - Speculative counter trend play on MJ, given the overwhelming negative sentiment - Simple position to manage, the long-dated nature means that we have 12 months for this ETF to regain it's legs, also means that if we get a market correction, we have the time to ride it out - Despite the price action, MJ has been a high beta performer, if we are going through a 'melt up' phase, then MJ is likely to be swept up in the euphoria - Both MACD and RSI signaling a possible bullish reversal (or even just a potential bear rally) - Moving averages signaling a possible bounce is due, not necessarily a total trend reversal
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