Update 10/8/2021: The price of my GM option rose sharply after the company announced revenue expectations from electric vehicles. Although the Fisher Transform indicator continues to give an up signal, I took my profits.
I exited my long call position 105 days before expiration, for a $4.75 credit per contract/share, a profit before fees of 120 per contract. Shares were trading at $58.53, up $2.09 from the entry level.
The Implied Volatility Rank at exit was 18.8%, down 0.1 point from the entry level.
I decided to exit despite the lack of an indicator signal based on past experiences wherein a price jump based on news is followed by a decline. I considered it better to exit now and put the money to work elsewhere.
Shares rose by 3.7% over one day for a +1,352% annual rate. The options position produced a 33.8% return for a +12,338% annual rate.
I have entered a long call on GM, using options that trade for the last time 106 days hence, on January 21, 2022. The premium is a $3.55 debit per contract share and the stock at the time of entry was priced at 56.44.
The Implied Volatility Ratio stands at 18.9%
The maximum risk is $355 per contract and the maximum reward is uncapped.
How I chose the trade. The Fisher Transform indicator gave a buy signal, and I confirmed that it was unlikely to be a whipsaw based on Elliott wave analysis.
By Tim Bovee, Portland, Oregon, October 7, 2021
Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.
No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.
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