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Started By
Message
Dedicated Short / Put Thread
Posted on 3/28/21 at 1:16 pm
Posted on 3/28/21 at 1:16 pm
Lots of long-biased threads on here. The idea behind this one is to focus on bearish ideas. I had some good results buying puts on Navios Marine (NM) last week once conditions became overbought and technicals suggested the rally was losing steam. With the market acting a bit jittery due to rates backing up, I think overbought, speculative names with declining volume will continue to act as a good short-term bearish trading signal. Feel free to use this thread as a repository for information and ideas for trades expected to perform well on the short side in general or during periods of broad short-term market weakness. My general bias right now is towards small-caps in non-yield-based industries, giving me a screen criteria of:
1. Optionable
2. No dividend yield
3. Market cap < 2 billion
4. RSI > 70
I’m also remaining very disciplined by not taking a position until the rally appears to be fading, as evidenced by high RSI (not just 70, but that’s where I start to look) and plateauing volume. I won’t take a position until the first red day, preferably on the heels of a green day in which the stock closed well off intraday highs. You can see Navios met all of these criteria intraday on Mar. 23. That’s the kind of setup I’m looking for a repeat of. Bonus points if the setup coincides with the market also testing previous highs.
Currently, the only name meeting these criteria is Daseke (DSKE), but note I still think it’s early after Friday’s convincing rally on high volume. If that rally continues but then starts to show exhaustion this week, I’ll be looking at May puts.
1. Optionable
2. No dividend yield
3. Market cap < 2 billion
4. RSI > 70
I’m also remaining very disciplined by not taking a position until the rally appears to be fading, as evidenced by high RSI (not just 70, but that’s where I start to look) and plateauing volume. I won’t take a position until the first red day, preferably on the heels of a green day in which the stock closed well off intraday highs. You can see Navios met all of these criteria intraday on Mar. 23. That’s the kind of setup I’m looking for a repeat of. Bonus points if the setup coincides with the market also testing previous highs.
Currently, the only name meeting these criteria is Daseke (DSKE), but note I still think it’s early after Friday’s convincing rally on high volume. If that rally continues but then starts to show exhaustion this week, I’ll be looking at May puts.
3
Posted on 4/5/21 at 8:54 am to RedStickBR
BW meets my criteria today. Took a position in May puts this morning.
Posted on 4/12/21 at 5:24 pm to RedStickBR
This one has performed as I hoped it would. Topped out on lower volume and then began to sink under its own weight even as the market melted higher. I plan on taking profits tomorrow and running the screen again.
Posted on 4/14/21 at 9:44 am to RedStickBR
Updated the screener. Looking at QUOT this morning. Still may be a little early, so just monitoring for now.
Posted on 4/14/21 at 10:06 am to RedStickBR
Opening a short position in COIN asap
Eta: not really
Eta: not really
This post was edited on 4/14/21 at 10:07 am
Posted on 4/14/21 at 10:15 am to RedStickBR
It takes some balls to short in this market. Finding irrational pricing isn’t difficult, but things can stay irrational for a while. Good luck.
Posted on 4/14/21 at 10:40 am to slackster
quote:
It takes some balls to short in this market. Finding irrational pricing isn’t difficult, but things can stay irrational for a while
It is difficult, for sure. It takes a good deal of timing, especially when this market pumps hard for no reason, it will lift the bearish stocks as well.
I have my best success on technicals like Red stick and sector analysis.
I don't necessarily have an RSI criteria since if it's above 70, it's likely after a rally and IV is elevated, which is a concern if you're making debit trades. I like looking more for bearish patterns and trade on the short term continuation.
Posted on 4/14/21 at 10:50 am to slackster
quote:
It takes some balls to short in this market. Finding irrational pricing isn’t difficult, but things can stay irrational for a while. Good luck.
I completely agree, and this isn't a "short and hold" strategy. I've noticed smaller cap, non-dividend paying securities are struggling to hang on to recent gains in the wake of higher interest rates and the secular rotation towards more defensive names. The RSI screen is just a means of narrowing down the list, not a trade signal. So far, the strategy outlined in the OP is working, but it requires a disciplined approach to be sure. Of course, small-cap speculative names could become leaders again, in which case the strategy may no longer work.
Posted on 4/14/21 at 11:14 am to RedStickBR
Sorry for the off topic post, but I feel like you guys are the ones to help me understand this. It's for a call I hold.
1) How can the last price be $.15, but be up $.18 on the day? That seems impossible as a call option can't sell for -$.03
2) If the last sale matches what I bought my options for, how can I be up a couple hundred bucks?
1) How can the last price be $.15, but be up $.18 on the day? That seems impossible as a call option can't sell for -$.03
2) If the last sale matches what I bought my options for, how can I be up a couple hundred bucks?
Posted on 4/14/21 at 11:17 am to Chucktown_Badger
That is your broker calculating based off the bid/ask spread
Posted on 4/14/21 at 11:18 am to Chucktown_Badger
The last price is likely the last "traded" price, while the price change shown is likely based on the mid point of the bid ask spread (even if there have been no trades for the day).
Posted on 4/16/21 at 9:30 am to RedStickBR
QUOT puts working out. Bought the afternoon of the 14th and as with NM and BW, it can’t hold the rally.
Posted on 4/16/21 at 9:50 am to RedStickBR
How aggressive are you being on your strike and expiry? You're going ATM and pretty close expiry to take advantage of gamma?
Posted on 4/16/21 at 11:00 am to JimMorrison
Yeah, going between 10-25% in the money and 1-2 months to expiry, depending on how rich the premiums are and how stretched the run-up looks. This kind of strategy could stop working any time, but it’s been consistent so far. The biggest thing in my view is not getting in too early and waiting for signs of not just deceleration, but actual reversal. I’ve used the same entry rules for all three and they’ve been timely (which could, of course, be nothing more than dumb luck 
)
)Posted on 4/16/21 at 11:23 am to RedStickBR
Sorry for the additional off-topic intrusion, but I feel like you fellas are the right people to ask. I tried to sell two covered calls for my AKBA position. Only 1 one of them filled (I assume that's why there's a -1 there), the other expired, and I just want to make sure I'm reading the numbers correctly and know my options.
I thought that when the option sold I'd get the $25 premium immediately. Was that not the case? Can I sell this covered call before expiration and make money if I want to?
Clearly I'm not super educated on this stuff, so using a clunker of a stock at a lower cost to dip my toe in.
I thought that when the option sold I'd get the $25 premium immediately. Was that not the case? Can I sell this covered call before expiration and make money if I want to?
Clearly I'm not super educated on this stuff, so using a clunker of a stock at a lower cost to dip my toe in.
This post was edited on 4/16/21 at 11:24 am
Posted on 4/16/21 at 11:45 am to Chucktown_Badger
It’s a negative 1 because you sold the option, so you’re short the option.
You can buy it back whenever you want, but you only get the full premium if you hold to expiry and the option is out of the money or if it becomes so out of the money before expiry that you can buy back at 0 before then.
You did get the 25 premium immediately, but you only keep the full premium if the option price subsequently goes to 0. Otherwise, you only collect the difference.
You can buy it back whenever you want, but you only get the full premium if you hold to expiry and the option is out of the money or if it becomes so out of the money before expiry that you can buy back at 0 before then.
You did get the 25 premium immediately, but you only keep the full premium if the option price subsequently goes to 0. Otherwise, you only collect the difference.
This post was edited on 4/16/21 at 1:01 pm
Posted on 4/16/21 at 11:47 am to RedStickBR
Thank you
Posted on 4/20/21 at 9:54 am to RedStickBR
Getting that market tailwind on QUOT this morning. This is one reason I’ve been using this strategy, because these wobbly companies are likely to sell off hard if the market begins to defroth.
ETA: Exited the position and will re-run screen.
ETA: Exited the position and will re-run screen.
This post was edited on 4/20/21 at 12:54 pm
Posted on 4/20/21 at 11:06 pm to RedStickBR
from piggybacking off of some fintwits I zero'd in on IWM as a ticker that should continue to down trend on the weeks ahead.
I decided to play it safe with just doing call credit spreads instead of buying puts. My spreads for 3K credit are pretty much guarantee for their 4/23 expiry and I tripled down for 10K of credit expiring 4/30.
I decided to play it safe with just doing call credit spreads instead of buying puts. My spreads for 3K credit are pretty much guarantee for their 4/23 expiry and I tripled down for 10K of credit expiring 4/30.
Posted on 4/21/21 at 6:30 am to audioaxes1
I think you’re right about IWM. That’s one reason I’m screening for small caps, as I think they’ll continue to lag the rest of the market for a while. Thanks for sharing your strategy.
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