NKLA Trade on Sep 8, 2020 15:47 from Marius: Tradervue User Stock Trades.

Big Picture
Markets gapped down at the open and still selling off. Not all sectors are selling off as much as others. Some areas of equities have bids in. Oil was selling off notably. The markets haven't showed a bounce so didn't want to place too much emphasis on a short overnight with this much of a move and current levels. The VIX was also showing pullback from the high of the previous session which to me signaled option markets pricing less volatility in the shorter-term. Thinking there is a bounce soon if these price actions continue.

GM announced a 11% stake and partnership with NKLA. At the same time TSLA was selling off due to the recent 5B offering and not being included into the S&P 500. The amount of buying in NKLA with this market down move was notable. Against the markets current direction. Thinking that a market bounce is due at least before another higher low to open short positions. NKLA showing unusual bullish sentiment fit a shorter-term weekly options strategy.

Intraday Fundamentals

RVOL 6.83
AVOL 19.59M
ATR 4.56
Short Float 3.2% (Koyfin data)
Shares Float 97.62M
Market Cap 19.28B
Institutional Ownership 13.40%

Options Statistics
Sizzle Index 12
IV 207.70% (Edited from thinkBack data)
IV Percentile (Data removed because IV was incorrect + this metric should be elevated. Taking screenshots in the future which already implementing)
P/C Ratio 0.319

Options Position Metrics
OI 866
VOL 1,818
Delta .04
Theta .12
Vega .00

Technical Analysis
HTF breakout from wedge price consolidation. Extremely elevated volume.

Market Technical Analysis
SPY / VWAP / ADD / TICK

QQQ / SMH / XLF / IWM

SPY / VXX / TLT / GLD
(Removed due to duplicate incorrect data. Configuring better layouts for journal tracking + review in the future)

Tape Reading
First time reading and using the options time & sales and trying to get data/edge from it. I review all of the reading the tape meetings from the SMB traders and have traded intraday with this tool so I do have some experience. Seems like there is some crossover in the methodology of analysis from the normal level 2 + time & sales moving over to the options chain + time & sales. Was viewing the weekly calls being traded. Saw EOD when price was trading at VWAP multiple call buyers on the ask. The overall sizzle was bullish and leaning towards the call end according to the earlier stats mentioned. Noting the largest call option order of the day occurred around beginning of the price action and largest put option order occurred around HOD.

Time & Sales

Options Chain

(options statistics screenshot here for future trades)

Trade Management + Trade Review

Futures bounced overnight and continued with the cash equites open. NKLA showed weakness at the open. After the first hour I checked in on the position and exited seeing it trade down to the S1 45 level. This had not moved favorably in this trade and I scalped the small profit in the short move. After 45 was breached the selling continued and the position if I still had on would have been at -0.5R. My thesis was invalidated in the shorter-term and there is more risk in the trade as the day developed. Can get back in the trade if price gets back above 45 which I have an alert set.

Noting I was also testing on paper a short call at the 60 weekly. This worked out extremely well developing into a +4R trade overnight. This was higher risk because of the momentum. I did this because of the heavy call side activity and was thinking that it had a chance of reversal if the news did not have substantial follow through the next day. My original thought on the live trade was follow through w/ a market bounce. What ended up happening is a market bounce without follow through on this name which signaled to me buying exhaustion and control back to sellers for NKLA.

Adding additional info at the week end. Hindenburg Research released a detailed short report on the company. I had an intuition that something wasn't following through on this trade the morning after I entered the trade. The price action was not favorable as mentioned. Sometimes the price action "is all that there is". There could be other participants in the know ahead of time and exiting positions and or pressing the other direction. The short report was released the day after I exited the bullish invalidated thesis trade. Key learning experience to reinforce here is to recognize the process and execute based on evidence not bias.

Link to short report :
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thinkBack Alternate Trade Replay

Position
- Short -10 : 11 SEP 20 (Weeklys) 60 Call @ 1.125 (papered in realtime)
- Long +10 : 11 SEP 20 (Weeklys) 35 Put @.175 (Reverse of my live order + lowest EOD mark price. Also noting this would be the aprox incurred drawdown if I left the live position on until expiration. Assignment of 1000 shares would have been more likely ITM. Keeping in mind that this would have been the true risk result and will have to be more aware when using options in this method)