As you can see, a nice uptrending stock that today had a close above the high of the low day - i.e. our bullish entry trigger.
The Big Chart checked out fine, so then I had to go to a longer viewed chart to find the target:
You can see from the horizontal purple line above our current price action where the an old support, new resistance level is located. So our target is that general area - $18ish.
Next we gotta find where our stop would be - this is $0.25 below the low of the low day - which would be $15.03.
Now we can find our risk vs. reward since the price is $15.74. Calculating this out, we find our risk vs. reward is approx 1:3. Anything above 1:2 we like and the higher the better! So far a green light to take the trade.
Now onto the trading screen:
We are looking a the January expiration Calls since these are the closest to the timeline we want.
The highlighted line shows the January 12.50 Calls have a Delta of .88, which is the closest Delta to .70, therefore these are the ones we want. Plenty of open interest, so we're good to buy these Calls. Look at today's volume for this strike - 1 - yep, that's me again. "One is the loneliest number that you'll ever do..."
I bought the January 12.50 Calls for $3.60. Immediately after doing this, I put in my stop order to get me out if the price goes down and hits $15.03. I have another stop at 50% which would be $1.80.
From here, we monitor the position daily - and hopefully get our profits soon!!
On another note: I'm going to keep these posts nice and short and will make them shorter as we go along. This way I can start addressing other items to enhance your trading knowledge. By this point you should be able to basically do these on your own as it's following the guidelines from earlier posts. If you are having a hard time, just go back and look over those posts for clarity. It will get easier and you'll be able to do this quicker and quicker.
Now - let's make money.
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