CHWY Trade on Jul 20, 2020 16:28 from tradelikelarry: Tradervue User Stock Trades.

Trade Planning:

• Daily Chart: Uptrend, Consolidation below ATH.
• TTM Squeeze: Daily
• Earnings Date: 9/8
• IV: 65.35%
• Potential Profit: $332
• Potential Loss: $468

Reason For Entry:

• Playing the Daily chart, Put Credit Spread. CHWY is developing a 3 and 8 EMA cross over the 20 SMA. Price action bounced nicely off the 50 SMA which has historically been a key support level. Watching for a move to new ATHs. It also has 23% short float which adds of the probability of price action popping to new ATHs. Risking about 2% of my portfolio on this trade.

Reason For Exit:

• CHWY pretty much faded after my initial entry and on 7/24 it gapped down well below my stop out point and closed the trade for a loss.

Recap:

• I entered the trade early, typically I will execute a trade AFTER a 3 and 8 EMA cross over the 20. I do this for conformation of price action holding above the previous days candle. In this trade, I entered on the 3 and 8 cross setup. I am not saying this is the reason why this trade was a loss, I am only saying that I need to follow my rules and be consistent with them. My exit was correct as I followed my rules and closed the trade below my stop out level. This was a Put Credit Spread and I positioned sized correctly and since I did that, I had a small loss that is equivalent of 1% of my overall portfolio. On to the next one.