15 jun - a good winner , expiring at max profit today.sometimes the coin flips comes up for you sometimes they dont. scotts on-air trades in google docs spreadsheet
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31may - based on a tweet response today from scott, he appears to still be holding this spread despite being near 85% of max profit.. good winner so far..i think if i still held after todays down move off of JOY earnings, id be taking profits..just me though:
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14may - on tonights fast money, scott nations has a trade on CAT, here is the video clipCAT clip . guy adami adds some comments as well
Sell the June 95/100 call credit spread for $1.90 credit
couple issues i have with this trade. if youve followed me for a while youll probably guess the reasons:
1. i dont like selling credit spreads in general just because i dont like being in position to root for stock to not go up. for CAT specific, any China positive news will move this stock
2. my cutoff for selling credit spreads is to have a 75% or higher probability of max profit..use the Trademonster analyse tab for that.. this spread comes up right at 56% probability of max profit..50% probability is like a coin flip..essentially like guessing.
3. the strikes for this spread are so close to at-the-money..this stock was just near 97 one trading day ago..so you have no leeway in stock movement for the next 30days.
4. i like my strikes to be on the other side of some technical level that will help stop the movement against me..(doesnt mean it cant keep going of course). so for this chart i would like a credit spread to be at least above the 200day that it just lost...so really the first level if i was to do a credit spread, which im not, would be to look at the 100 level..ie a 100/105 credit spread..the presumption is that the 200day will act as resistence now
5. looking at the June 100/105 spread, would get about a .80 credit and have 75% probability of max profit..its above the 200 day with the 50day quickly approaching
6. the upside to scotts trade is that if timed right and you got that $1.90 entry, a further down move will yield a profit right away and depending on the amount of profit you are looking for, you could peel out of this with 25% profit real quick.
not saying that scott will not be right and make a profit but his selection just does not fit with my rules.. im looking for higher probability setups... 56% is not high probability..
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