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Home › Forums › Closed Trades › [CLOSED +11%] Parabolic Short in GS
Setup: Parabolic Short
Price: Gap higher from close
Description:
Banks seem like they are the last to the party in this market rally. Goldman is up 5 days in a row and is closing above its upper Bollinger band.
Into any gap higher, and especially any run into 160 without break, you want to look to short some call spreads.
Here’s what I’m looking to trade:
Full Time Profits Order Ticket | ||||
Type | Asset | Duration | Strike | C/P |
---|---|---|---|---|
STO | GS | Aug4 | 170 | Call |
BTO | GS | Aug4 | 175 | Call |
Total Credit: | 0.7 |
The gap higher on the back of JPM earnings allowed you to get into the original spread around .90.
If you’re still not in it, then you can go further out to September options (they just opened up this week). Going a little further out allows you to hold through earnings without a ton of risk.
Full Time Profits Order Ticket | ||||
Type | Asset | Duration | Strike | C/P |
---|---|---|---|---|
STO | GS | Sep | 170 | Call |
BTO | GS | Sep | 175 | Call |
Total Credit: | 0.6 |
Scaling in, adding at 0.90 and 1.50
Steven, I am showing 1.15 credit on the trade right now. Are you saying to wait until the credit gets to .60 to enter this second half of the trade? Thanks.
Michael,
You probably had the option duration wrong. I posted two trades, one for the Aug4 strikes, and one for the Sep monthly strikes. So if you saw a 1.15 credit, it was probably on the Aug4 trade.
Into 157.50 is a key gap fill level. I want to take profits on all GS bear call spreads into that level.
The pullback has been incredibly benign, and while the spreads are profitable, all it takes is a little push back into the 160’s and upside momentum could wipe out these gains.
So no matter which spreads you sold, take profits on them.
Full Time Profits Order Ticket | ||||
Type | Asset | Duration | Strike | C/P |
---|---|---|---|---|
BTC | GS | Sep | 170 | Call |
STC | GS | Sep | 175 | Call |
Total Debit: | 0.20 |
Full Time Profits Order Ticket | ||||
Type | Asset | Duration | Strike | C/P |
---|---|---|---|---|
BTC | GS | Aug4 | 170 | Call |
STC | GS | Aug4 | 175 | Call |
Total Debit: | 0.24 |