Issue 55: [Case Study] 3 Charts, 1 Trade – Masters In Trading

[Case Study] 3 Charts, 1 Trade

Welcome to Issue 055 of Masters in Trading Digest.

Today, we look at a longer-term chart of the S&P 500 Futures and talk about the all-important line-in-the-sand.

We’ll also do a Trade of the Week Case Study in $RAD. Behold the power of Scalping Gamma!

Four Traders Win $60,000+ in USD!!! Yes!  This really happened.

“Largest One Day Gain of My Lifetime” – Craig S.

Enjoy the 25-minute interview with Tom T.  – an incredible recap of his personal trading journey.

Enjoy,
Jonathan

LINE-IN-THE-SAND

SHARED WEDNESDAY: LINE-IN-THE-SAND

We should always pay attention to major moving averages on longer-term charts.

Above, the 100-period moving average and the 200-period moving average are overlaid on an S&P 500 Futures chart.

The cross-level is roughly $4490.  We would expect this level to be a major pivot point moving forward.  

  • Above $4490:  Bullish /ES Futures, Bearish Volatility
  • Below $4490:  Bearish /ES Futures, Bullish Volatility

UPDATED FRIDAY: LINE-IN-THE-SAND CHART

As we like to say, the stock market does not like to hang around BIG numbers.

TRADE OF THE WEEK

Every Sunday, we share a few trade ideas with our Wall Street Wiretapper members. On Monday, we host a live trading brief to answer questions, review Sunday trades and then discuss a plan for the week.

I want to review trades shared 2 weeks ago.  Two trades we shared were set-it-and-forget-it, which means there was not any position management needed to optimize the trades in $QQQ, and $CALM.  Traders just needed to get out of their own way and let the positions work.

But the $RAD trade was different. The $RAD trade you need to have an understanding of Scalping Gamma to efficiently take advantage of market movement. Scalping Gamma is a position management technique we teach in our:  3 Ways to Manage an Options Position.

Let me explain:

$RAD was shared on April 04, 2022.  

The trade shared was a suggestion to buy a strangle – the exact trade looks like this:

  • Long 1 $9 calls for $.65
  • Long 1 $8 put for $.65

Total Risk = $1.30 ($130, you can never lose more per 1 lot)

Over 20 years of studying and teaching options, I find it way easier to think of options as underlying stock, rather than puts and calls.

If we look at the strangle just like stock the trade becomes:

  • Long 100 shares of $RAD from $9
  • Short 100 shares of RAD from $8

Total Risk:  $1.30 ($130, you can still never lose more per 1 lot)

April 7th $RAD Gaps Down – Traders Should BUY Stock

New Position:

  • Long 1 of $9.00 strike Calls
  • Long 1 of $8.00 strike Puts
  • Long 50 shares from $6.00

April 14th $RAD Gaps Up – Traders Should SELL the Stock they bought.

New Position

  • Long 1 of $9.00 strike Calls
  • Long 1 of $8.00 strike Puts
  • Long 50 shares from $6.00
  • Sell 100 shares from $9.00
  • New stock position:  Short 5o Shares $RAD.

Risk $130

Profit $150 (Long 50 shares from $6, sold at $9)

NEW Max Risk:  +$20

There’s nothing more important in Options Trading than learning all the Options available to you.

 

WEB 3.0 - Searching For Magic Internet Money

As many have heard, this past weekend we had 4 of our coaching clients win a raffle that included a prize package in excess of $80,000!

Tom’s NFT is now worth over $200,000!!!

Listen to this AWESOME interview:

Enjoy the Interview with Tom– All I can say is:  WOW!!

Masters in Trading Digest - Issue 55

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FINAL THOUGHTS

WHAT TO EXPECT IN THE NEXT MIT DIGEST

There’s been some nice feedback from this blog post, The Debate: In the Money vs. Out of the Money Options, written by Stacy Brovitz. The post clears up many misconceptions about in-the-money options and out-of-the-money options.

Keep your feedback coming into support@mastersintrading.com. We’re excited to share your feedback along with fantastic suggestions for upcoming issues.

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

Thanks for reading,
Jonathan Rose

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