I am going to review the trades I took on Wednesday, October 19th, 2022. The market was a bit choppy, with the Futures opening up slightly before heading lower just before the opening bell. I was initially looking for a push up and a few green candles, followed by a reversal and a break in the opening range to the downside. While AMD was choppy, I was looking to take trades on the Q’s and SPY. However, about 20 minutes in, I didn’t like the break to the downside, and I got stopped out at break-even or with a small loss. Therefore, I only took two trades today, both on SPY, essentially the same trade.
In hindsight, the obvious trade would have been to go long at the Wick right at the open and short at the top, selling the top and covering at the bottom. But I was looking for a break to the downside off the open. I drew a purple line under the dotted line to represent the pre-market low. As it came off the high of the morning, it came close to the low of the day, and it wasn’t showing much strength or movement higher.
When the volume began to decrease, I thought it might reverse, and if it approached the pre-market low, I would take quick profits. I took one of the 368 puts and got filled at $1.81 at 9:48 and 46 seconds. It did wick slightly lower than the pre-market low, but once it started to slow down and show any resistance right around that whole number there, I just took profits there and got out, holding it for just a minute.
The second trade I took was on SPY as well, as it tried to break above the VWAP. It wasn’t showing much strength and flirted with the VWAP and the 9 EMA. As I was still thinking the market might roll over, I wasn’t feeling that it was a great setup. However, I thought it was worth the shot for a quick scout.
I took the same strike, the 360 put, this time at 9:56, just about seven minutes after the first trade. I held it for about four minutes or so, taking the entry right as it broke below the dotted line. This trade was at a slight loss for a minute but then came back down, and I had more confidence to hold it for a bit longer. As soon as it wicked below the entry point, I got out and took the small profits there. I didn’t take advantage of other opportunities that morning, as I wasn’t feeling my best. So I took those two trades and called it a day after only about a half-hour of trading. Normally, I trade for about an hour and a half or so, typically until noon.
- Paying attention to the opening range as well as the premarket levels can help to make better trade decisions.
- Price moving beyond the pre-market lows or highs in determining the direction of the market.
- The value of taking quick profits and not being too greedy but also not cutting winners too quickly because of fear.
When to buy SPY puts? You want to buy SPY puts when the price is breaking a key support level or is showing that it might break that level very soon.
Why is SPY good for options? SPY is good for options because they are cheaper than most expensive stocks. They also expire everyday which can give more trading opportunities.
Always remember trading of any type is risky. It can result in part of all of your money invested. Only trade with money you can afford to lose and only after you have done your own due diligence. Never blindly follow the advise of anyone without first conducting your own research.