SPLK Trade on Jun 3, 2021 15:40 from Marius: Tradervue User Stock Trades.

New week and new month opening after the 3 day Holiday weekend. It was a 4 day shortened week with notable movers in the market including another gamma squeeze in a meme stock. A good flow of economic reports coming in positive which ended the week with SPY at new ATH's. Fed beige book indicated a start of tightening policies. Macro movements in motion in response. Note, this is a a big picture overview of the week vs. daily due to this being my only trade for the week. I like to observe price action and market/investor sentiment a few days into a new month with more institutional involvement with positioning before executing trades. Interesting market regime with small caps showing notable activity.

Fundamental Analysis

Splunk reported Q1 earnings loss of (0.91) vs (0.70). The company was positive the prior quarter but now returning to negative. Non-GAAP operating margins were also worse at -35.4% than prior guidance of -30%. Investors are noting the unclear path forward to sustained profitability. The company is transitioning its main business model into the cloud which is causing the performance decline resulting in the markets uncertainty sentiment. There were also multiple lowered targets issued by banks covering the company. There is a notable institutional ownership of 90%.

Quantitative Analysis

Intraday Fundamentals

RVOL 3.07
AVOL 2.39M
ATR 4.58
Short Float 4.10%
Shs Float 162.77M
Inst Own 90.00%
Market Cap 18.30B

Options Statistics + Tape Reading

SI 3.426
IV 43.88%
IVP 21%
P/C 0.758
VWAP 113.399

Elevated options orderflow with a notable amount of calls traded at the BID possibly implying a seller hitting or an institution with a shorter-term hedge. The BID was hit at the opening bell at the 145 call with a block order of 300 contracts which represents a notional value of 4.35M. My trade size was around 10% of that done at a lower strike. The orderflow did not indicate a notable amount of puts at the ASK which would imply hedging and lower price momentum. It was testing a HTF support area but also only 1 day left in the contract.

Options data stats/notes day prior to catalyst (n/a)

Options Positioning

OI 2045
VOL 1389
Delta .02
Theta -.06
Vega .00
Gamma .01
Prob T 3.49%
Prob ITM 1.72%
MMM +/- 3.388
IV Series 55.08%

Positioning was within parameters and strike selection was evaluated based on probability and risk. I did consider a closer strike but it did not make sense in my current parameters. This was a scalp trade on an (A) setup so size was pressed here.

Options data stats/notes day prior to catalyst (n/a)

Technical Analysis

Elevated RVOL with momentum flushed into support area. Close at LOD with more volume done at the BID. IV notable crush implying less volatility and possibly more consolidation to lower price action ahead. Noting the downtrend going back 1Y. Sellers in control with a 90% institutional ownership. Multiple failed rally attempts and more supply than demand based on the chart flow.

3 day chart looking at supply / VPOC around 115. 110 seems like a notable HTF inflection level. Sellers in notable control. Anticipating buyers at 110 as value area. Notable flush and v shape recover last year but this is year 2 in the recovery as market regime's/themes are different. If growth areas continue to see selling this may be part of it. There was notable buying at EOW as a factor class.

Trade/Risk Management & Review

Trade was executed with scale out adjustments due to margin requirements. I position larger in these trades as a scalp trade but need to manually calculate positioning in to margin due the broker's computer mis-calculation. This had happened last week in a similar trade. This is only effecting the call write end as these do carry more risk. Will be more precise on the next trade.

Also noting I did scale in more into the trade after seeing the spread widen a bit and was able to hit at a better price. I was only using the computer generated margin calculation at that point. At market close is when things changed and adjusted and I was hit with the margin call.

I managed the margin call by scaling out in the AM session. This was managing risk but for the broker-end similar to managing my position risk based on price fluctuations. Was a little confused at first but stay focused on the plan and contacted the support trade desk to clarify. Keeping in mind the computer systems can be off a bit but to remember to manage my risk appropriately. And it is my sole responsibility as markets can hit extremes and be unexpectedly swift as seen in history until this day. ie. mechanical model gamma squeeze's

Weekly Review

New part in my review to place weeklies here at EOW. Overall good for the shortened week packed with notable price action and fundamental reports. Need to schedule more dedicated screen time for trading and utilize more of my playbook. Staying sharp into next week and keeping in mind my sharpened edges learned transitioning from last month.