Home › Forums › Open Trades › Parabolic Short in LULU
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July 10, 2016 at 4:07 pm #6384Steven PlaceKeymaster
Setup: Parabolic Short / Measured Move Short
Price: 80
Description:
The stock has seen a very nice second run after its earnings event. The stock ran 72.50, pulled back, and had a clean breakout.
The rate of change of the stock is increasing, indicating that it is going parabolic. It’s currently above its upper Bollinger Band.
The resistance level I’m watching is $80 per share. There’s also some resistance at 82-84 coming into play from 2012-2013 (not shown).
The play here is to wait for a move to 80 then fade the stock by buying some put spreads.
Strategy: August 80/75 bear put spread @1.60. The current price for this spread is 2.63, but if LULU runs and a little time decay comes out of the spread, then 1.60 is very doable.
Stop out: If LULU closes above 85, then close ou tthe trade for a loss.
Profit target: The previous resistance at 72.50 would be a good expectation of a retest. If LULU hits the rising 20 day moving average then scale out half of the tarde.
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You must be logged in to view attached files.August 16, 2016 at 3:40 pm #6755Steven PlaceKeymasterThe stock is hitting the price levels we want, but it’s taken over a month to get there– that means it’s no longer fit for a parabolic short.
If it sees a fast move up to 84 I’ll look to fade, otherwise I’ll wait for earnings to see if it has any large gaps.
September 8, 2016 at 10:47 am #6921Steven PlaceKeymasterWell, the stock did have a large gap… lower.
Considering how steady of an uptrend this has been, we can expect momentum to slow as it runs into the low 60’s.
This setup is now a pb2ma (into the 200 day moving average) as well as an EPS LL trade.
Here’s the setup:
IWO Premium Order Ticket Type Asset Duration Strike C/P STO LULU 21 Oct 16 62.5 Put BTO LULU 21 Oct 16 60 Put Total Credit: 0.39 Will add to the trade as LULU headsd to 65 and 63. If it loses 62.50, I will roll the spreads out to December.
September 29, 2016 at 11:09 am #7049James DawsonParticipantAre we doing anything with this trade? It is at 61.66 today?
September 30, 2016 at 10:58 am #7052Steven PlaceKeymasterAfter spending a month consolidating in September, it lost 65 and is running to 60.
We are going to roll this trade and add size.
First, the closing trade:
IWO Premium Order Ticket Type Asset Duration Strike C/P BTC LULU 21 Oct 16 62.5 Put STC LULU 21 Oct 16 60 Put Total Debit: 1.34 And now the opening trade. This is to be done with twice the size:
IWO Premium Order Ticket Type Asset Duration Strike C/P STO LULU 16 Dec 16 52.5 Put BTO LULU 16 Dec 16 50 Put Total Credit: 0.40 Right now we are locking in a loss, but we will trade around the 2nd and 3rd tier to get back to breakeven.
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