10% Profit INTC Swing Trade on Choppy Markets — May 28 Trade Log
Once again a choppy trading session, the way stocks and markets are moving is something radical with not much of a logical explanation. It is no lie that markets are not very much linked to what actually happens in real time and in some way are ahead, although big news can always have repercussions on stocks and indices, the markets right now are reflecting a completely different behaviour than what any economic fundamentals could point towards (it is said that markets right now are looking past the pandemic, unemployment, bankruptcies, etc.); millions of people losing jobs on a complete freeze of several economies, thousands of companies filing for bankruptcy around the world and much more, still, stocks have been rallying since March.
Ever since the year lows stocks have been pushing upwards, SPY is now testing the 200 SMA and as seen above the last 2 trading sessions it did manage to cross it. Although not much reflected in this ETF stocks did have a selloff at the end of the day after President Trump announced a conference call for tomorrow regarding China, a market moving theme.
IWM reflects the market’s reaction much more clearly on Trump’s unexpected news.
After the crash the rally was so accelerated that many believe it is in someway “not real”, including us, a lot of people have not participated in this rally fearing that sometime in the near future there will be another correction, there is a lot of institutional money missing on this rally and volatility is a given on these last days, on the way back up many bullish GAPS were also left unfilled, highly traded indices usually don’t take long filling up GAPS. Many believe that the unexpected China announcement could become a trigger to another correction.
At the time being we are loaded on puts, on the short term; our entrance point was faulted and not the smartest move and we have been rather distracted trading this week, also taking into consideration that many stocks are overbought and there is a chance we could exit these positions without any losses, a privilege when not entering a position at the right time.
INTC June 19 2020 $60 PUT
Yesterday we slept on a great exit point for this position, even though we saw the contract 30% up, for some reason we did not sell. It could have been that we were consumed on the IWM PUT, or nominally we were not attracted to the profit ($40) but since the beginning the target price for the underlying was never really so attractive. It was still and opportunity so we took it but when the moment was right we just let it pass, god knows why.
Another important factor, this contract was really close to expiration, less than a month and these usually depreciate significantly by the day even more when the stock doesn’t make any significant moves which was happening with Intel.
We saw the contract with an Unrealized P&L of about -$30 all day, until the afternoon selloff, INTC quickly started dropping and rather than risking more time decay on the contract or another jump we sold without a doubt. 10% profit ($13 dollars), although not our best trade, a sure relief at least for me to not worry about only the stock heading another direction but also a quickly depreciating contract.
