JWN Bearish inclined Naked Calls 11 Mar Expiry (Mar Track 2)

2022年2月28日

Whats The Plan/Trade/Thought

• I identified this trade by looking at Finviz Groups and shortlisted the mid volatility Industry players (1 Month bull, 2 - 1 Week bearish). This was because I wanted to be trading in industries with less volatile price movements. Previously for the past 4 months I have been trading in industries at the forefront of any movement. Travel, Banks, VXX
  
• JWN is part of the department store industry and has seen a huge dip (20%) on the 24 Nov due to lacklustre results. While I don’t expect any huge dips in the near future, I also don’t expect huge bullish jumps especially with the current climate
  
• The other department store counters I explored were M and KSS. I liked KSS’s price movement also as it already spiked on the 24 Jan due acquisition news. M did not provide a good price for options contracts
  
  I Feel
• I felt good for this trade and tactic as I have adjusted by trade selection and strike prices towards a volatile market bearish ranging market.
  
• This means I will take extra far strikes, even through it means sacrificing some alpha
  
  Imagine Yourself Taking The Other Side
• I would feel afraid given all the negative news on Ukraine and Inflation. I do not think I would take this trade on the opposite side at all.
  
  Imagine Yourself As A Neutral Observer
• While there is confidence in selling calls, there is also the earnings release on the 1 Mar. But given the entire market I think this is a safe bet. There is enough room for the price to rise (33% from strike) and it expires on the 11 March just before the release of the Interest rate increase (Week 14 Mar).
  
  Look For New Information
• I am clearly rejecting the risk of earnings and if I am wrong in this trade. This would probably be the reason.
  
  How Do I Feel Now
• I feel confident since was planning it and since I entered. This is a good trade and if it goes south it would either be because of me ignoring Earnings or just how the world turns.
  
  Trade Specs
• Sold 270 Calls @ 0.33 - Strike 27
  
• % to Strike is 33%
  
• ATR is 55%
  
• BP used is 55k
  

2022年3月4日

注释

JWN jumped 37% right up to my strike because of strong earnings. I expected some movement due to earnings when planning this trade. But I did not anticipate such a huge gap. I need to stay away from stocks with earnings within my contract period

With 10 days to go and because my play is based the overall situation of the market. Will keep observing the price action and if it shows strong bullish patterns I will bite the bullet and close it at a loss

2022年3月14日

交易结束：到达目标

Yay!