OSTK Trade on Oct 29, 2020 15:36 from Marius: Tradervue User Stock Trades.

Overnight markets with a mid-term technical reversion. Cash equites followed through led by technology. ER's reported after hours for a handful of mega caps. Most of them traded down in the after hours. This has been a trend this earnings season even while a majority of companies reporting on the positive end. Learning and keeping this in mind for future trading.

I didn't have any plans to place trades today going into the end of the month but OSTK reported and was talked about in the game plan meeting. It also showed up on my scanner. It traded very weakly against the market with notable elevated RVOL and key HTF levels. This caught my attention and went through the process to place the trade on. Quickly read the report and noted the price action. Reports didn't seem that bad with beats but the guidance on "out of stock" logistical issues may have contributed to the sell off. Institutional ownership is notable here with a good size short float. Possible market participants on the wrong side of the trade and maybe funds deciding to take profits with the high flying runner for the year. There was a pre-market run up and stuff at the open also.

Intraday Fundamentals

RVOL 3.979
AVOL 4.365M
ATR 7.12
Short Float 11.2%
Inst Own 57.97%
Shs Float 42.748M
Market Cap 2.66B

Options Statistics

SI 5.789
IV 115.26%
IVP 17%
P/C Ratio 0.508
VWAP 69.715

Noting the 15,957 calls traded at BID or below signaling possibly more on the sell side (bearish) however 26,090 between the market and 9,145 at ASK or above. Put call ration was also 0.508 which signals more calls then puts traded. Interesting because this is usually a bullish sign but in this case can be more calls sold. Noting that usual bearish activity is more puts being bought at ASK and heavier on the options side of things.

Options Position Metrics

OI 1,154
Vol 2,103
Delta .02
Theta -.05
Vega .00
Gamma .00

Tape Reading

Looking at the Call side for large orders and seeing heavier call buying in the AM session. This was part of the reason why I was more risk adverse on the bearish direction of this trade. Usually I'm seeing more put buying and call selling but keeping in mind other factors like momentum, levels, and price action. The options are still derivatives of the former.

Also added the level 2 because I wanted to see if there were any bigger players EOD supporting the price moving down towards 60. The stock had a large spread at points and I noticed 1000 block bid orders on EDGEX a few times. Just wanted to see if I could spot aggressiveness on this end. Didn't add much but played another variable. Will be keeping this on in future trades when I have my tools set-up expanded.

Technical Analysis

When I first viewed the daily, the deep candle engulfed almost about the previous 38 days of trading. In this case this was notably bearish with a close at the low of the day. 80 is a HTF level all the way to early 2000's and it has been rejected with elevated RVOL on a catalyst. Risk management procedures are in place due to the high flying strength of this stock but momentum is strongly to the downside. This traded to 60 support and there is not much below + keeping in mind all buyers within the last 38 trading sessions + institutional ownership.

In-Trade Post Notes on Execution and Trade/Risk Management

I hesitated in executing this trade on the tail end of an ok to good performing month. The volatility has been challenging and learning a lot building onto the career and business. I had to put the trade on seeing the set-up in my playbook but I sized it smaller at 20 contracts keeping in mind the current volatility, market strength up to the close, and the stock being a high flyer for the year. I changed up my orders in the order book and took a bad price because of my execution delay and making multiple adjustments to my order to get filled at better prices. The trade checked off most of my list and considered an A set-up but in a current market where risk is much elevated.

Trade Review

Markets opened weaker and lower. Position was checked and plan was to let options expire OTM and collect the premium. Scaled and doubled the position seeing the trade working at the open to double the income on the trade now with higher probability and keeping risk the same or less. The reason being for higher probability and same/decreased risk is the development of the trade being the last day of the options contract while having the strike out and past notable levels. The stock traded below 60 which was an important level on the HTF chart. There is possibly more downside follow through here with the catalyst and selling pressure into the next couple weeks. Great example of a strong catalyst, supply/demand imbalance, weak market, profit taking from a high flyer, and key HTF technical level.

I'd grade the execution being at the end of the month as a B+ to A keeping in mind to improve the initial entry. Trade decision to add the position was key and brought the trade to the highest reward to risk for the month at 1.23R. Interesting to note going forward that this trade set-up was a scalp that was sized as it developed on a shorter-term time frame. Usually scalps start with large size then exited quickly. Nothing wrong to scale into a working trade after it develops more and nothing wrong with starting with a smaller size as an entry. Key is to keep an open mind and be flexible with the trades.