I am a big advocate for studying one or two stocks that have decent daily price movement to trade options daily. I follow Alphabet (GOOGL) closely and understand its tendencies. Similar tendencies can be found in other stocks, but I am comfortable with it's tendencies for trading.
Today it opened higher than Monday's closing price, but Monday it broke below the 1249 level that held the week of Alphabet's 2nd quarter earnings. I expected it to go down initially today and roar upwards after it finds a bottom. It closed Monday slightly below 1249, but opened at 1252 and pointed down quickly. It was so quick that it didn't come back to where it started the way I like to typically jump into a trade. It did find a bottom at 1240 where it retested a couple of minutes after 10am which made it perfect to buy Call Options.
Unfortunately I was influenced by last Tuesday's movement where it opened 10 higher and went higher right off the bat so I bought my Call Options too soon. Rather than sell at a loss, I decided to wait for the turn. The only problem with waiting is that what I paid for the Call Options when Alphabet was trading at 1252 I had to wait for it to get to 1256. I sold up slightly due to lack of discipline for not waiting for the bottom. This would not work well on Thursday or Friday as it doesn't have that kind of change in direction most of the time.
When there is a big drop with Alphabet, it moves in $10 to $12 peaks. What I mean is that it opened at 1252 and bottom at 1240. It closed yesterday at 1248 and peaked at 1260 although the tradable peak was 1258. Therefore you can use the price movement of the stock to measure good times to take profit it is in an extended overbought or oversold state based on the stochastic indicators.
In other news, Home Depot had a blow out quarter report before the market opened and it went up in the premarket trading and fell sharply during the market session This stock will go up over the next couple of days as long as Macy's and Walmart don't disappoint over the next couple of days.
Macy's hit a new 52 week high today. I find that when a company runs up before reporting earnings, it receives too high of expectations and will sell off after the report no matter if the earnings is good. With it running like this, I bought a Put for protection on the downside and expect to buy a Call Option after it finds a bottom if the report is good. Nvidia is following a similar pattern, but the problem is their options sell at a hefty premium and the report is due after the market is closed on Thursday which doesn't give you time to anticipate the direction.
Tesla appears to be losing stream after last week's Tweet by Elon Musk about going private with the company stock. I feel it is going to be in a tight Trading range Unless we get some market altering news.
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