Volatile markets suck, plain & simple. Today, I got sucker punched by a trade in Target (TGT). I had a Buy-Stop set up if the stock continued its bounce and headed up, which was triggered, only to have AHM CRUSH the rally today, sending TGT down heavily, hitting my Stop-Loss and creating a nice Bearish Engulfing pattern to boot (circled in blue). Here's the chart:
Oh well, such is life as a Trader.I did enter a few more trades (CMTL, ESV, JOSB, STLD, UTX) on Buy-Stops which were all doing well until the AHM news really took the steam out of a nice rally. Hopefully the market won't go too much further south, but it may. That's what Stop-Loss triggers are for! I am going to watch those trades for now and see where they run before I enter any more.Back to PG:
As was discussed yesterday, I felt that a Bear Call spread was a good play based on the position in the channel, and it was as the stock fell towards support. If you wanted to play an Iron Condor, you could Leg-Into a Bull Put Spread once the stock reached the support of the channel.Happy Trading!
PG huh...a Bull Put Spread and/or an Iron Condor. Let's take a look see shall we and see what we uncover?
Well, our first rule of thumb for any Credit spread is we want one of two things happening. First, ideally we want the stock to be trending AWAY from the credit spread, which back when the Triad Traders met, would be a Bull Put. As of today though, the credit spread to enter would be a Bear Call since we have seemingly reached the resistance level of our horizontal (neutral) channel. The second thing we would like to see is a neutral trend in the stock, showing that it has little to no real overall movement. As you can see from the chart, PG has been rangebound for months...that's good for this type of trade!As Keith pointed out in his comment, an Iron Condor on PG looks like a solid bet based on the flat, rangebound trading levels over the past few months. Certainly a 65/70 Bear Call and 60/55 Bull Put spread look to be somewhat safe based on the support and resistance levels. One caveat though, earnings are fast approaching so it may be dicey getting into any trade at this point. For argument's sake, let's "leg-in" to an Iron Condor. Right now, since the stock is at channel resistance, I'd first play a Bear Call Spread at 65/70. As of today (after hours), the September 65/70 spread would net me a $1.00 credit ($1.10/$0.10), or a 1:4 Reward/Risk ratio...typically lousy of an Iron Condor. I would then wait for the stock to move back to support before entering the Bull Put spread to close the IC. My hopes would be that the stock ended up somewhere between $60.01 and $64.99 (preferably not THAT close) on OED in September.
Of course, you would need to set up your Stop-Loss points, and/or decide to close the short side of one of the spreads if the stock began to move against you.
Happy Trading!
As was discussed yesterday, I felt that a Bear Call spread was a good play based on the position in the channel, and it was as the stock fell towards support. If you wanted to play an Iron Condor, you could Leg-Into a Bull Put Spread once the stock reached the support of the channel.
