Original Question:
Instances in which I’ve absolutely nailed the top in a stock or market:
– Silver 2011
– QQQ In the Fall
– TSLA, twice
– TLRY
– BA
Instances in which I’ve been completely wrong on the top:
– Indices late 2017
– BA 2017
– Indices during QE2 Rally in 2013
– Short vol a few instances, have moved way trying to nail the top on that one.
Instances in which I’ve been right but early, recently:
– OSTK
– W
– JKS
– TAN
– BIDU, twice
– CHWY
– IWM, twice
Has there been a shift in how parabolics have traded over the past few years? And what reasons can we attach to it?
– Fund flows causing “buy at any price” algorithms– see ARKK
– Softbank going nuts
– RH traders crowding into the same names
– Convexity with option buys and vanna
– Early shorts getting smoked
– IV crank and put buys create a natural shelf in the stock.
– Big water, small hose
– Short gamma just isn’t working
This is not just me, this is everyone. Low float land is seeing names stretch further and faster, because the know the shorts are crowded.
Solutions:
– More size and aggression with profit taking
– Straight delta instead of put buys or put calendars, with delta-neutral put buys at the end to create a synthetic straddle/strangle
– Watch for IVSpike
– Look at ADX
– Shorter duration call spread sales or even naked calls.
– Using intraday price/volume spikes for better entries on shorts
– Understand that this market is special and has a shelf life.
– Longer dated calendars can work a little better if IV isn’t too much of a risk
– EOD straddle or synthetic straddle and then delta hedge into gaps higher in premarket sessions
– Can short first bounce/backside trades, or play the range. Don’t have to nail the exact top on these names.
– Can also look at, instead of fading frontside of moves, look for the first crack and hold, then short the breakdown into that level. RDFN is a good recent example.
– Go back and research how the tops happened, what kind of volume, what distance from 50/20/10 MAs, what kind of range expansion we saw.
– Maybe wait for the daily kill candle, see JKS as example.