Rationale:
-NKE appears to be breaking out of an inverse head and shoulders pattern with neckline at approximately 88.90, which is long term resistance
-S&P making new all-time highs
-NKE has been in a multi-year uptrend; on 5/30 retraced to bottom of long term up channel and before reversing to continue higher
Trade Planning
-structure: unbalanced butterfly
-major support: 89, 86
-add point: TBD
-stop loss (price & PnL): break and hold below 87.50 (approx $50-60 loss)
-take profit price / risk-reduction plan: 30% profit target
-lower breakeven: $87.72
IVR=18%
IV/HV=83.6%
Potential ROC=453/547=83% (max); 203/547=37%(min if trade is a winner)
Key corporate events (earnings, dividend, investor day, etc.)= none
How much risk should/did I take? $547; appropriate risk (3.5% of NLV)
2019-07-22 15:38:49
-this trade has gotten a bit away from me; I didn't honor my stop (if breaks and holds below 87.50)
-currently price is at 86ish and my unrealized $ is -180
-at a dilemma, given I didn't honor stop I should close position; however, price is at $86 which is a long term support
-market also appears to be stabilizing (made a prior new low on Friday, but volatility has also come back in as of today)
-if 86ish level breaks (make a new low, have to cut trade)
Recap:
2019-07-28 11:58:40
-cut trade as it wasn't working out and I hadn't obeyed initial stop; wasn't rallying after I waited
-I don't think 2 daily doji candles in a row is a strong bullish signal
-thought it was better to eliminate financial and mental risk of keeping position on
-I entered right as stock made a big up move w/o completing much of a pullback
-also was not onside for too long during the trade
How could I have traded this better?
-need to have much better entries than this
-if I don't have a strong entry, can consider being more patient once i'm in the trade
-once again, this at least rallied in the near term; such that it could've been taken off for small profit (if not initial profit target)
Gain/loss relative to expected gain/loss:
-loss 2.3x larger than expected
-big variance from expectation due to not following plan but dollar amount well within risk limits (less than 1% of NLV)
Execution detail:
Date/time | Symbol | Side | Price | Position |
---|---|---|---|---|
2019-07-12 10:59:52 | AUG16 19 85 CALL | buy | $4.280 | long |
2019-07-12 10:59:52 | AUG16 19 90 CALL | sell | $1.190 | short |
2019-07-12 10:59:52 | AUG16 19 92.5 CALL | buy | $0.4600 | long |
2019-07-24 12:39:11 | AUG16 19 85 CALL | sell | $2.580 | 0 |
2019-07-24 12:39:11 | AUG16 19 90 CALL | buy | $0.3900 | 0 |
2019-07-24 12:39:11 | AUG16 19 92.5 CALL | sell | $0.0900 | 0 |
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