December 7

How did I plan a 1000% return trade on SPY puts on December 5, 2022?

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Banking with Planning

My original thesis of 403.70 would hold for more consolidation was wrong, so when that level broke on volume, I started Planning.

List of Steps to Plan the 1000% gain trade

Step 1

Identify where might it go.... Using the levels from Daily Market Edge (our watchlist), we target $398.50 (the lower blue line)

Step 2

Select a contract.  We chose 401 since if it gets to $398.50, the contracts will be worth $2.50

Step 3

Where do I enter?   I planned that $403.70 level will be retested before going lower and if it gets there the option price would hit $0.20. (from experience and charting the option contract)

Ask yourself, are you willing to risk 0.20 or 100% for $2.00+ gain if right?


If YES: then place the order to fill at 0.20,  If $1000 bet. buy 50 contracts.

Exit Strategies:

Ok so now that we are in, there are many exit strategies one can take.  I'll share two.

Strategy :  All or Nothing

Place sell orders at $2.20-$2.50.  The contracts will either hit target price or you lose the $1000.  At 2.20-2.50, the profit will be $10,000-$11,000 using $1000 in capital.

Strategy :  Risk Free and then Ride to Target

Place sell orders at $0.80 and $2.20-$2.50.  

Sell 20 contracts at 0.80 to lock in $1200 profit, and make the trade risk free( even if goes to 0, walk away with $600 profit).  Place  order to sell at 2.20-2.50 on the remaining contracts -- the profit will be $7200+ using $1000 in capital.
(I prefer this strategy because the trade is stress free and you can let it work.

SPECTRE

I suck at looking at candles and profit and loss and often end up exiting too soon.  So depending on the idea, the best thing I can do is place stop and profit orders and then walk away.  LITERALLY WALK AWAY.  Go watch a movie, do anything but screw up my trade plan.

THIS POST AND ALL CONTENT ON THIS SITE REPRESENTS OPINIONS ONLY AND PROVIDED FOR EDUCATIONAL PURPOSES ONLY. CONTENT SHOULD NOT BE CONSIDERED ADVICE OR A RECOMMENDATION TO BUY OR SELL A SECURITY. PLEASE SEEK ADVICE FROM AN INVESTMENT PROFESSIONAL.


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