AMZN Trade on Dec 2, 2021 09:35 from srosas13: Tradervue User Stock Trades.

Situation: After a hard sell off the previous day AMZN had a huge measured potential trade from 3450 to 3410 this was a big R:R pay off with a clear path down on any weakness in the name or the market. I am looking to get short at max risk and capitalize off this trade today to the short side.

Self Talk: At the market open none of the names or the indexes showed any aggression to the downside. I missed my TSLA trade by TS blocking me on my equity margin requirements, why it does this I have no idea so I was forced to sit out of that play and hit this AMZN trade with full power. AMZN had a wide spread and the options were spready as well. I had my initial entry set with 2 contracts 3450 and an add at 3446 the PM lows. Once I breached the level I entered at 18.90 and saw a push to 21. Instantly I was reversed and the bid dropped. There is a 40 point reversal candle and the Q's and AMZN start to build. After the candles stopped building I wanted to wait for the 10am candle to see if it confirmed and held to build above the 20ma. I noticed that on the 5 min chart the price was in a tight consolidation and not really pushing anywhere. I will not this is dangerous territory for options because we dont want that stall in price and time. I ended up adding 3 addition contracts on the 3rd candle what I believed to be the rejection and pull back from the 20ma. It wasnt and I was holding a position that was 5 contracts and down about 1500-2000 which was already over my max risk. I continued to hold and I felt there would be a test eventually during the day to the bottom bolly and wanted to also see if the next candle stalled or began to build. On the retrace to lows I began to scale out of the position which had a cost basis of 14.00. I couldnt get consistent price actions because the spread and the bid kept jumping around between 14-16 not allowing for that smooth continution as price fell. Once I began to approach b/e again I sold the entire position

Consequences: Overall this was a winning trade however I was not please with the R:R ratio on the trade and also the management of the trade. At one point the options contract had dropped to 9.00 from 18 that is a 50% drop in premium due to the time of week and also the strike selection. In the future I want to choose a strike closer to the money that way in the event that the play reverses the premium isnt hit as bad. I also saw the position at one point go down to -3000 this is dangerous territory.

Coach Talk:

The idea and entry into this trade was according to plan I had dedicated my max risk for this trade today and I feel like my position sizing and entry were great.

I believe I could have picked a better strike I chose the 3400 strike because that was the measured potential of the trade and it also had the most volume over the 3425. Because of the distance though when AMZN reversed to 3480 the premium was eventually chopped in half this is really risky. Also I had a chance to go B/E or take a small loss on the trade when it went from 18.90 to 21 I need to be more aware of getting out of a trade if it reverses quickly I need to be quicker on the keys and awareness.

I dont like the fact that at one point I was down -3000 in the trade, at no point in time was I ever too paranoid or out of control in the trade but none the less if the 10am candle had began to build this could have went poorly against me and is an issues I have dealt with in the past. I would much rather keep my discipline versus dealing with a day where I may lose 3000 or more dollars. I believe the key to this trade was not taking that b/e opportunity and then turning around to reaccess and take the rejection trade off of the 20ma.