This is a septuple bottom you don’t want to miss

BY ANDREW GIOVINAZZI

January 25, 2024

Yo Pit Crazies,

Sometimes in my session traders bring ideas and I try to make trades out of them. One of them was during an Easy Trade Button session and I thought it would make a decent trade. Mark put out a bunch of Ratio Married Put trades in the Trading Desk. You could call those trades, “How to buy market tops with confidence.” You can, you really can. If you want to see conditional trading examples, Trading Desk and the Easy Trade Button are good places to go.

What is conditional trading? Every market condition has an ideal option trade. Put the trade on and then manage the result. I want to see an edge for my option trade before entry. All Option Pit products start with a trade edge.

Now below is a chart of a stock that makes multiple bottoms at around the same price. I am not sure that having a stock with a septuple bottom is an edge but it is curious.

2 year mystery chart is APA

So how to make a trade out of this mess of a chart

Trading Options I can trade, direction, time or volatility

The 6 month detail chart is Apache Corp (Ticker: APA). Post earnings the implied volatility got very cheap so I bought a strangle. That is a call and a put with different strikes. I put the trade on in the Easy Trade Button class two weeks ago. The strangle leaned long delta and I figured with a bull market it should be an easy win. No!

APA dropped 10% but the good news is that I had a put to sell. I also bought a lot of duration, out to March, so the strangle put paid for 70% of the value of the trade. Instead of being down .72 per contract I am down .27 and .27 is my reasonable risk rate for a long option premium trade for this account.

6 month chart of APA

If you buy options, you need to find ways to make them cheaper. All the Option Pit services do that. Making things cheaper gives traders an edge. For more on this check out my Ratio Married Put video here.