What a great sell day. SPY gapped up into all-time highs, offering a low-risk short in the morning. It went on to consolidate for awhile, trying to find a direction, but once we saw multiple rejections at 480 we knew it was "short o'clock." The 480 puts went from $1.60 all the way to $4.
If you saw the premarket prep, you should have been mentally prepared for this setup as I shared SPY's typical behavior.
TSLA Doesn't Disappoint, Offers Up a Big Fail
Tesla (TSLA) cleared 1200 at the end of the day yesterday. It poked above and below that level in the premarket, only to push up in the morning and then fail beautifully. We love when that happens.
In full disclosure, I was long biased. I was looking for a double bottom off 1180, ideally wanted 1170 and then fast reclaim over 1200. That didn't play out, so we're nimble, and were able to plan both trades. I took an initial short out of the gate for the first leg down, then per plan for upside, went long, but then when it stalled out, flipped back to the short. Took a couple of losses in the initial chop, but recognizing that 1200+ wasn't in the cards and that downside was, more than made up for it!
If you went short at the 1200 watchlist level failure, you could have bought 1180 puts for $22 and watched them triple to $66. TSLA continued to offer range and setups in both directions all day. That's why it's a fixture on the watchlist!
New EV Participant FORD Comes Roaring Back
Ford (FORD) had a mind of its own today. It moved completely outside the general market, pushing up into ranges we haven't seen in ten years. If you grabbed 22 calls, they went from $0.73 all the way to $2.60 at the highs. I wonder if we'll continue to see nice movement in this stock now that it's joining TSLA in the electric vehicle space. Remember, when a new name comes to the watchlist, there is usually good opportunity.
Semi Stocks Pick a Direction — Down
NVIDIA Corp (NVDA) and the other semiconductor stocks sold off today. Once NVDA broke 303 and then 300, it was "game on." The 300 puts went from $4.50 all the way to $17! Glad we were watching.
Goldman Makes Money (Surprise, Surprise)
The big banks are on the move. Goldman Sachs (GS) made the watchlist today, and (it turned out) for good reason. It trended nicely upward, the 405 calls moving from $3.50 at the open all the way to $7.30 at the highs. We're keeping an eye on them to see how they report in the next few weeks.
Member Trade of the Day
Edumomo member Tg777 rode short positions on SPY and Docusign (DOCU) to a 7.51% gain in portfolio value! Congrats!
Edumomo member DavidP rode short QQQs in his baby account for over $200% account growth using the skills he developed with us! Way to go DavidP.
What a way to start 2022 -- I love seeing members develop skills and take trades based on their own ideas. That is what Edumomo is all about -- Building better traders, not trade followers! Thank you for learning, growing and applying the processes and techniques.