FB Trade on Oct 31, 2019 09:37 from littrean: Tradervue User Stock Trades.

Gravatar

Shared by
littrean

 

DAYTRADE DETAILS ON WHY I TOOK THIS TRADE.

image
9:29am

Facebook's ATR: 4.52

CHARTS:
image
image
image

WHY DID I TAKE THIS TRADE?
Facebook had earnings AH yesterday and it gapped up into its key resistance of $200 and started selling off into the PM. It started to trend down so I charted it while acknowledging it had the highest RVOL on my watchlist having traded 1.4mil shares by 9:29 am. Not only did it have a trend line from the ER high but there was a very strong trend line from the December lows that it would have needed momo to breakthrough. However, the market was selling off due to trade war news from China which gave me the extra confirmation I needed to go short on a stock that had technically beat earnings.

Normally I wouldn’t watch the 1min TF but I really wanted to see what was going on as quickly as possible—something I’m going to start doing during the first 15mins of the day before switching over to the 3min. The puts I was looking at had put in a $.26 low (losing massive value from the IV drop after ER) so I knew the risk would be very small catching a small ($100) starter position there while the stock hit my trend line. Once I got confirmation that sellers were in control as the close of the 3rd 5min candle was aggressive and strong. I was reading L2 and the tape and saw a huge buy order for $194 while FB was trading around $146 so I made the hypothesis that market markers would bring the price down to that level to fill the buyer. I added to my position as price retraced about 50% of the 5min candle and failed as the 9ema acted as resistance on both timeframes.

My plan was to scale into the position on a break of the opening range low which occurred a few minutes later with a PT of $194 since I knew there was a huge buyer in that area. I started to scale out around $194 but after price consolidated here for about 12 mins the buyer was taken out and I saw this happen on the tape but I had already closed my full position.

CONFIRMATIONS:
L2, tape, heavy wicks against the 9ema on 5min TF

SETUP:
Earnings fade, ORB

STOP LOSS / PROFIT TARGET / RR RATIO
- stop: 5min close above VWAP
- pt: from 197.5 - $194 = $3.5 drop
(Facebook’s ATR is 4.52 so even from the high of 198.09 there was still more room to the downside)
- risk reward: 1:3

WHAT COULD I HAVE DONE BETTER?
Had there been more volume on the 3rd 5min candle I would have felt more confident to take on more size but I was reading the tape and things were very clear that buyers were being taken out. Because my risk was so low I actually could have taken more size around the $.26 - $.35 area and also should have really sized up on the ORB since I’ve studied this play.

Around 11:40 am I noticed how FB had retraced to the opening range as well as VWAP, coincidentally the option’s premium returned to the LOW price of $.26.

image
image

I wanted to reenter but TOS had a service-wide issue all morning and I took it as a sign to not take any more trades for the day. This is something for me to pay attention to in the future. This was another grade A setup and could have resulted in a quick and clean 200% win. I sat back and just read the tape, it was interesting to see the tape once FB failed to reclaim VWAP and returned to the $194 area.

image

I saw a huge market order into the ask which temporarily held the price before buyers gave up and price tanked and the premium jumped! FB continued to sell off the option’s value increased much higher later in the day before cooling off much later when the SPY started to climb back up.


Execution detail:

Date/time Symbol Side Price Position
2019-10-31 09:37:47 1 NOV 19 190 PUT buy $0.2900 long
2019-10-31 09:48:45 1 NOV 19 190 PUT buy $0.3500 long
2019-10-31 09:48:45 1 NOV 19 190 PUT buy $0.3500 long
2019-10-31 09:48:45 1 NOV 19 190 PUT buy $0.3500 long
2019-10-31 09:55:01 1 NOV 19 190 PUT buy $0.4500 long
2019-10-31 09:55:01 1 NOV 19 190 PUT buy $0.4500 long
2019-10-31 09:58:32 1 NOV 19 190 PUT sell $0.6300 long
2019-10-31 09:58:32 1 NOV 19 190 PUT sell $0.6300 long
2019-10-31 09:58:32 1 NOV 19 190 PUT sell $0.6300 long
2019-10-31 09:59:42 1 NOV 19 190 PUT sell $0.6800 long
2019-10-31 10:04:52 1 NOV 19 190 PUT sell $0.7400 long
2019-10-31 10:09:29 1 NOV 19 190 PUT sell $0.6600 0


Leave a comment about this trade!

You need to log into your Tradervue account to leave a comment. If you don't have one,
it takes just a few seconds to sign up, and it's free!

View plans, Sign up for free, or Log in