Weekly puts in SQ for price drop

2 Mar 2021

Square has gone up and up. The red lines mark selling (price pullback) that matches RSI peaks. I am looking for the same to happen here. Buyers rushed in before earnings, then stock went lower, and today price is chopping at 254-256. Buying seems exhausted and more people may book profits soon

I am looking for price to stay below 257 and head down to 248-250, maybe 243-242. Sometimes these moves happen overnight. By using less capital (small position) I can comfortably hold overnight, absorb theta decay, and allow option price to fluctuate with stock price.

You can look for an entry on 5/15m chart. I bought weekly 250 puts this morning. Will sell most today and will hold only 1-3 contracts overnight.

2 Mar 2021

İşlem aktif

Price dipped below 252 in the afternoon and took a bounce. On the daily chart price has bounced up to test the 20sma today while stochastic %D is pointing downward. On the 30m chart price could hold the 10ema and break out higher, or it could move down to the 20sma ~ 250. This is a higher risk trade, so I want to evaluate my confidence in a move down. Even if I have confidence in my trade idea, I will balance the trade risk with a very small position held overnight.

3 Mar 2021

İşlem elle kapatılmış

Sold all but one weekly 250 puts this morning with stock around 244-245. Overnight hold resulted in 70% gain. Be mindful that this could have also been a 70% loss if price reversed up. This is where capital risk is most important, along with confidence in trade idea. Will sell final put today, either below 242 or at stop.