Instances in which I’ve absolutely nailed the top in a stock or market:
– Silver 2011
– QQQ In the Fall
– TSLA, twice
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:
– BIDU, twice
– 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.
– 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.