Thank you Elon
Two days ago I gave you my game plan. Today, we can only compare it to one of the countless buzzer beaters Phil Jackson drew up for MJ. I stated that if you buy the weekly puts right when the stock price prints at the previous all time high, you could nail a 20% return. This is exactly what happened.
Lets dive into today's trading. Remember, the plan was to wait until we got close to the previous all-time-high(ATH).
Using the platform thinkorswim, I changed my drawing set to "Price level" and drew a line from the apex of the $TSLA stock. We see it drawn in blue above.
Zooming into today's action(5 minute chart) we notice that around 6:55am pst we start to close in on that blue line that we drew on the daily chart. Following our game plan, we began looking at the December 20th puts slightly out of the money (OTM). We ended up going with the 12/20 380 puts.
Take a second to look at the price of the options between 7:00am PST and 7:30am PST. From its low to its high the options go from 1.88 to 2.88. If you're wondering why we are choosing to only look at the 7:00-7:30 time slot, it is because right around 7:00 we tap the ATH line(blue) we had drawn up. If you purchased these options perfectly at its bottom and sold at its top, you would have been able to come away with a little more than 50% in profits.
Nobody is this good. I don't care if you are the Lance Armstrong of trading, it is almost impossible. Having said that, you begin to realize that maybe 20% won't be that hard after all.
Now that we understand how we knew exactly where to purchase these puts, we start to ask ourselves "now when do we sell"? Our entry at 7:02am ended up giving us a $2 entry price, we got hosed all the way down to $1.88 but we knew that as long as we did not cross the ATH line our plan was still intact.
So when do we take profits? This is the point where we dive even deeper into our edge. We are looking at our metrics and using them as points of resistance and support. Remember, we do not need to cover the entire move to run off with our newly printed profits... we can run off before the fun is over. If you want the metrics we use, I offer them freely to all who ask. We ended up getting out at 7:28am when the contracts were at 2.4 or 20% higher.