M Bearish inclined naked calls 13 May expiry (May Track 2)
Whats The Plan/Trade/Thought
- The Departmental Store sector was not one of my original shortlist. But I also do think my current method of shortlisting from the median of the monthly performance (both negative and positive), might not be the best. Even if the price performance meets my expectations on what I should be trading in a volatile ranging market.
- Earning season did not help as part of my strategy is to stay away from earnings which are unpredictable
- With nothing to show for my May shortlist. I was exploring my past trades and found that the Departmental Store sector had good prices and WAS close to how I wanted the price movement to be (within a range).
- Macy’s had strong S&R lines at 28.54 and 22.97 and had lower high points
- I sold calls on this as I expect it to range between the S&R points with a bearish inclination
I Feel
- I felt good about this trade, confident as it met my expectations and what I was looking for.
Imagine Yourself Taking The Other Side
- With the lower highs I would be worried. Also i expect some bearish movement from the Fed announcements early May
- We do know that while the overall consumer sentiment has been bearish, consumer spending is up and rising. This could drive some upside
Imagine Yourself As A Neutral Observer
- Given that we feel that it is a Ranging market with Strong S&R lines. I think both could be right but with interest rate increases the probabilities are more bearish
Look For New Information
- No new information that I could find on Macy’s
How Do I Feel Now
- Post entering the trade, I feel good especially since prices have drop with Fed Powell’s announcement on the half-point hike. I was expecting this price drop to happen in May and not this week as the half-point hike is not a surprise and has been reported before
Trade Specs
- Sold 290 Calls @0.26 - Strike 31
- % to Strike is 15%
- ATR is 1%
- BP used 75k
- Max Gain: 7540
Trade closed: target reached:
Yay