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Knife Catch in NFLX

Home › Forums › Swing Trades › Knife Catch in NFLX

  • This topic has 1 reply, 1 voice, and was last updated 8 years, 3 months ago by Steven Place.
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  • March 24, 2014 at 10:03 am #2472
    Steven Place
    Keymaster

    The stock is oversold and coming into key support levels. It could fill that gap, but not overnight.

    nflx

    Sell to open May 345/340 put spread for 1.85 or higher (price has been fluctuating as high as 2.20)

    Adjust under 350

    nflx-risk

    April 7, 2014 at 10:16 am #2473
    Steven Place
    Keymaster

    Nasty, nasty move in NFLX. This sometimes happens with our bull put spreads, expecially when I call the trade a “knife catch.”

    What we will do now is roll the spread to lower strikes. This is known as a “condor roll” and will increase our odds in exchange for less reward and more risk.

    Here’s the trade:

    Buy 345/340 320/315 put condor for .75.

    Here is the thinkorswim ticket:

    BUY +1 CONDOR NFLX 100 MAY 14 345/340/320/315 PUT @.76 LMT

    Now.. if you can get filled on this trade outright that’s great, but you may need to break it up. To do that, you will have 2 separate trades:

    Buy to close May 345/340 bull put spread

    Sell to open 320/315 bull put spread

    I now have a hard stop at 318, which is just under major support from January.

    nflx

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