Winner: 28.06% Gain On PINS Put
Summary
- Bought the PINS 20AUG21 80 puts on Jul 7 at $7.20.
- Sold the put on Jul 8 at $9.22 for a gain of 28.06% on the trade.
- 3% portfolio allocation.
This trade is an example of a SHORT trade when a stock drops out of the RSI overbought territory - the Blue Zone on the chart.
I bought the put on Jul 7 when the shares dropped out of the Blue Zone and formed an Engulfing Black Cloud price bar - a bearish price pattern especially when it occurs at the top of a rally.
The next day the shares dropped 2% but held at the rising 20MA - I decided to lock in my gains on Jul 8 for a quick one-day trade. The shares then rallied the next day, but failed at the falling 9EMA on Jul 12 - this would have been entry point for a second SHORT trade, but I did not take it.
It is important to continue watching a stock after a winning trade as it most often provides other opportunities for profit in the same direction.
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