Issue 109: He Lost 700% - Masters in Trading Digest

He Lost 700%

At Masters in Trading, we aim to empower traders to find high-probability trades through a repeatable process, with a FOCUS on mitigating risks to optimize returns.

We accomplish this by building powerful trading tools that everyday traders can use to find market profitable winning trades. To keep traders on the best path, we share trade ideas with a fixed amount of risk, with the opportunity to win BIG if/when these positions trade in-the-money.

This week, we reviewed a trade in CCJ; an idea that was shared with all 20,000+ subscribers of the Masters in Trading Digest in Issue 96: New High Probability Breakout Trade.

The team at Masters in Trading has been uber-bullish on Uranium and have shared multiple options trades in the liquid yellow-cake tickers: UUUU, DNN, URA, CCJ

Below is a trading tool that traders depend on to manage an options position.

The green and red lines below are the outer bands of the market’s expected move. The market makers are saying, “This is the range we expect the market to trade within the next 30 days.”

Traders who bet on volatility expanding are buyers of options, and those who bet on volatility contracting sell options.

Quick Fact:  Buying options, calls or puts, along with debit spreads, are ways to buy volatility. Selling options, calls or puts, along with credit spreads is a way to bet on lower volatility.

The below allows us to visualize volatility (learn more in our 8-part series.)

Pablo Lucena Shared in Discord 07/28/22:  Bought some $CCJ Monday after seeing the weekly options over 100% IV – due to the upcoming earnings. One day later, my position is already up 110% – the price broke outside the upper weekly band. 

When this condition happens, and there's still time until the monthly expiration, the tendency is for the price to continue moving in the direction it's going, with the next destination of the upper/lower monthly band.

In the case of CCJ – I've got a few GTC sell orders to take profits when the price reaches $28.50 – the current upper band.  I'm OK with letting go of 2 or 3 units (out of 10) to fully recover cost basis + a bit of profit and be left with 8 or 7 units with unrealized profits.

Then Pablo presents a rhetorical question…

Why not just hold till expiration for me in this particular case? 

Look back at the June option cycle. Price was rallying – at the time, I was long the 22 strike calls. I should have been more disciplined and locked in some profits when the price hit the upper monthly band, but I wanted to let it run.

I didn't manage money properly on this trade, and as you can see – the price went down, and spent the next whole month doing nothing. 

My 22 strike calls, once deep ITM, expired worthless. I left the 700% profit in the options, plus the whole debit paid on the table. Mistakes a trader CAN NOT afford to make. 

These mistakes hurt me the most – not due to the loss of some capital, but due to feeling disappointed for not taking at least some profits. Never again

If you can relate to this story, I hope it helps you on your journey in trading. The moral of the story – manage your positions! 

Pick a strategy that works for you, and stick with it. I like having my buy/sell orders in the market as GTC limit orders – these volatility bands allow you to do this without second-guessing yourself.

Member Post – 08/24/2022 – CCJ 23.5 calls purchased for 1.05, Trading at 2.81 right now.  CCJ blasting through its upper range.

Jonathan Shares Video – 08/24/2022 – Uranium Explodes – DNN Trade

Members Post – 08/29/2022 – CCJ!!!!!!

Interested in learning a repeatable process to find great trades?

Every Sunday, we share 3 fresh trade ideas with all Wall Street Wiretapper Options members. 

Grab a one-month trial HERE, and don’t miss the next inexpensive option trade.

Masters in Trading Digest - Issue 109

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FINAL THOUGHTS

WHAT TO EXPECT IN THE NEXT MIT DIGEST

The next issue will be released on Friday.

Until then, trade smart and always manage your tail risk.

Thanks for reading,
Jonathan Rose

P.S. This 13 minute video will take your Options Trading to the next level. Watch Now >>>

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