3:30 p.m.

Half an hour before the closing bell. See the 2:55 p.m. entry below. No change. Wave 5{-9} continues its decline. I’ve updated the chart again.

2:55 p.m. New York time

S&P 500 futures end upward correction, reverse downward. The S&P 500 futures have ended the wave 4{-9} upward correction and have reverse to the downside, moving below the correction’s starting point. I’ve updated the chart, below.

SPY options spread entry. I’ve entered a short bear call options spread on SPY, anticipating that it will track the S&P 500 to the downside as wave 5{-9} continues. I’ve posted an analysis of the trade.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures reached a low of 4238 in overnight trading and then reversed, having risen more than 90 points at the opening bell.

What does it mean? The decline from March 3 high was a resumption of the downtrend that began on January 4. Internally, it is in an upward correction that began overnight within its first leg.

What’s the alternative? The ambiguity on the chart as to do with size of the movements being analyzed. Elliott waves are fractal in nature — a five-wave trend contains with it both smaller five-wave uptrends and three-wave corrections. The smaller degree labelings on a chart this early in a trend will be, at best, a guess.

What does Elliott wave theory say? Downtrending wave 5{-7}, a resumption of the downtrending wave 1{-6}, which began on January 4, is now underway. Internally, it is in wave 1{-8} to the downside, and one degree lower, within an upward correction, wave 4{-9}.

In Friday’s analysis I had labeled the smallest degrees on the chart as being of degree {-8}, but given the swiftness of their completion, I’ve pushed them down one degree smaller, to degree {-9}. This is what I meant above about the ambiguity of degrees early in a price trend — there’s simply not enough data to know for a certainty the size of the degree being labeled.

Wave 4{-9}, when complete, will be followed by wave 5{-9} to downside, the final wave within wave 1{-8}. It will carry the price below the 4238 terminus of wave 3{-8}, perhaps significantly below for such a small-degree wave.

We Are Here.

These are the waves currently in progress under my principal analysis. Each line on the list shows the wave number, with the subscript in curly brackets, the traditional degree name, the starting date, the starting price of the S&P 500 E-mini futures, and the direction of the wave.

• 5{0} Intermediate, 12/21/2018, 2316.75 (up)
• 3{1} Minor, 3/23/2018 2174 (up)
• 5{-2} Minute, 10/4/2020, 4267.50 (up)
• 4{-3} Minuette, 1/4/2022, 4808.25 (down)
• A{-4} Subminuette, 1/4/2022, 4808.25 (down)
• 1{-5} Micro, 1/4/2022, 4808.25 (down)
• 1{-6} Submicro, 1/4/2022, 4808.25 (down)
• 5{-7} Minuscule, 3/3/2022, 4101.75 (down)
• 1{-8} Subminuscule, 3/3/2022, 4101.75 (down)
• 4{-9} Bitsy, 3/7/2022, 4238 (up)

Learning and other resources. Elliott wave analysis provides context, not prophecy. As the 20th century semanticist Alfred Korzybski put it this way in his book Science and Sanity (1933), “The map is not the territory … The only usefulness of a map depends on similarity of structure between the empirical world and the map.” And I would add, in the ever-changing markets, we can judge that similarity of structure only after the fact.

See the menu page Analytical Methods for a rundown on where to go for information on Elliott wave analysis.

By Tim Bovee, Portland, Oregon, March 7, 2022

Disclaimer

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.

License

All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 futures fell from the overnight high, 4361.25, to low of 4281.25 during the day and then rose a bit. Wave 2{-8}, an upward correction, is underway and internally is in either its B (middle) wave to the downside or has started its C (final) wave to the upside. All of this is happening within downtrending wave 5{-7} within downtrending wave 1{-6}. I’ve updated the chart.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures traded in a narrow range below the 50% retracement of the rise that began on February 24.

What does it mean? By my best reckoning, the March 3 peak marks the end of the upward correction that began on February 24. The final leg of the downtrend that began on January 4 is underway and will carry the price well below 4101.75, the end point of the middle leg of the downtrend.

What’s the alternative? There are two.

Alternative #1: The March 3 peak was the end of the first leg of the upward correction that began on February 24 and is still underway.

Alternative #2: The March 3 peak is the end of the final leg, still underway, of the ongoing upward correction.

What does Elliott wave theory say? Elliott wave analysis is famous for its ambiguities and is illustrating that fact again today. Everything hinges on the interpretation of the March 3 high.

Under my principal analysis, the March 3 high , 4418.75, marked the end of a Zigzag correction that began on February 24 from 4101.75. From that point wave 5{-7} began. It is the final wave within wave 1{-6}, the downtrend that began on January 4.

That principal analysis best fits the chart, in my opinion. However, a strong case can be made for the two alternative counts.

Alternative #1 sees the March 3 high as the end of wave A{-8}, the first leg of the wave 4{-7} upward correction that began on February 24. The subsequent decline under this scenario is wave B{-8}, which will be followed by a rising finale, wave C{-8}, which likely will end wave 4{-7}, unless it forms a compound structure, stringing several corrective patterns together.

Alternative #2, like the principal analysis, sees the March 3 high as being within wave C{-8}, but under this scenario wave C{-8} is not complete.

The principal analysis will be confirmed if the price falls below 4101.75, the end of wave 3{-7}. Alternative #1 will be proven if the price continues to decline but remains above the end of wave 3{-7}. Alternative #2 will be proven if the price moves above the March 3 high, 4418.75.

One note on the principal analysis. I’ve marked the March 3 low as the end of wave 1{-8}. The degree of a movement is at best a guess in the early stages, and that low could well be of a lower degree, {-9} or {-10}. The proper degree labelling will sort itself out as wave 5{-7} continues.

We Are Here.

These are the waves currently in progress under my principal analysis. Each line on the list shows the wave number, with the subscript in curly brackets, the traditional degree name, the starting date, the starting price of the S&P 500 E-mini futures, and the direction of the wave.

• 5{0} Intermediate, 12/21/2018, 2316.75 (up)
• 3{1} Minor, 3/23/2018 2174 (up)
• 5{-2} Minute, 10/4/2020, 4267.50 (up)
• 4{-3} Minuette, 1/4/2022, 4808.25 (down)
• A{-4} Subminuette, 1/4/2022, 4808.25 (down)
• 1{-5} Micro, 1/4/2022, 4808.25 (down)
• 1{-6} Submicro, 1/4/2022, 4808.25 (down)
• 5{-7} Minuscule, 3/3/2022, 4418.75 (down)
• 2{-8} Subminuscule, 3/3/2022, 4283.50 (up)

Learning and other resources. Elliott wave analysis provides context, not prophecy. As the 20th century semanticist Alfred Korzybski put it this way in his book Science and Sanity (1933), “The map is not the territory … The only usefulness of a map depends on similarity of structure between the empirical world and the map.” And I would add, in the ever-changing markets, we can judge that similarity of structure only after the fact.

See the menu page Analytical Methods for a rundown on where to go for information on Elliott wave analysis.

By Tim Bovee, Portland, Oregon, March 4, 2022

Disclaimer

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.

License

All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.

Marvell Technology Inc. (MRVL)

Update 3/8/2022: I exited my bull put vertical options spread on MRVL, 37 days before expiration, for a $1.01 debit per contract/share, a profit before fees of $33 per contract. Shares were trading at $67.78, up $1.15 from the entry level.

The Implied Volatility Rank at exit was 66.7%, down 22.9 points from the entry level.

I exited because the position reached 25% of maximum potential profit, my normal exit point for earnings plays.

Shares rose by 1.7% over 5 days for a +126% annual rate. The options position produced a 32.7% return for a +2,385% annual rate.

---

I have entered a short bull put vertical spread on MRVL, using options that trade for the last time 42 days hence, on April 14. The premium is a $1.34 credit per contract share and the stock at the time of entry was priced at $66.63.

The Implied Volatility Ratio stood at 89.6%.

Premium:	$1.34	Expire OTM
MRVL-bull put spread	Strike	Odds	Delta
Calls/Puts
Long	55.00	74.0%	18
Break-even	61.34	68.5%	23
Short	60.00	63.0%	28

The premium is 53.6% of the width of the position’s short/long spread. The profit zone covers a 7.9% move to the downside and an unlimited move to the upside.

The risk/reward ratio is 2.7:1, with maximum risk of $366 and maximum reward of $134 per contract.

How I chose the trade. The trade was placed to coincide with MRVL’s earnings announcement, after the closing bell on the day of entry. The short strikes were set to coincide with the expected move of $7.25 either way, based on options pricing, which gives a price range of $60.09 to $74.59.

By Tim Bovee, Portland, Oregon, March 3, 2022

Disclaimer

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.

License

All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 futures so far have traded below the morning high, 4418.75, throughout the session, remaining in the region between the 61.8% and 50% retracement levels. The analysis is ambiguous. Was the morning high the end of wave A{-8} within wave 4{-7}? Or is the present decline just a mini-correction within a still rising wave A{-8}? Flip a coin. there’s no way to choose between them. I’ve updated the chart, continuing to mark it to show wave A{-8} still in progress.

10:40 a.m. New York time

MRVL earnings play entry. I’ve entered a short bull put options spread on MRVL and have posted a trade analysis.

10:15 a.m. New York time

NEM earnings play exit. I exited my short bull put options spread on NEM for 28.1% of maximum and have updated the trade analysis with full results.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures broke past the prior high, 4399, in the rise that began on February 24, reaching 4418.75 at the opening bell. The rise brought the price above the 61.8% Fibonacci retracement level.

What does it mean? The first leg of the upward correction that began on February 24 is still underway.

What’s the alternative? I have no viable alternative at this point. For more on the subject, see the Elliott wave theory section below.

What does Elliott wave theory say? The rise is wave A{-8} within wave 4{-7}. Yesterday’s afternoon analysis counted wave A{-8} as complete at the February 28 high, 4399. Today’s break above that level invalidates that analysis in favor wave wave A{-8} continuing. Under the rules of Elliott wave analysis, a 4th wave can’t move beyond the end of the preceding 1st wave. In this case, the end of wave 1{-7} was 4586 on February 2, and that price is the upper limit of wave 4{-7}.

In analyzing the chart I considered whether the February 28 high could be considered the end of wave A{-8}, the following decline wave B{-8}, and the subsequent rise still underway as wave C{-8}. However, under Elliott’s rules, a B wave must retrace at least 90% of the preceding A wave, and the rather stunted decline after February 28 falls short. So, I’m left without an alternative this morning. Past experience being a guide, I’m quite certain that ambiguities will develop.

We Are Here.

These are the waves currently in progress under my principal analysis. Each line on the list shows the wave number, with the subscript in curly brackets, the traditional degree name, the starting date, the starting price of the S&P 500 E-mini futures, and the direction of the wave.

• 5{0} Intermediate, 12/21/2018, 2316.75 (up)
• 3{1} Minor, 3/23/2018 2174 (up)
• 5{-2} Minute, 10/4/2020, 4267.50 (up)
• 4{-3} Minuette, 1/4/2022, 4808.25 (down)
• A{-4} Subminuette, 1/4/2022, 4808.25 (down)
• 1{-5} Micro, 1/4/2022, 4808.25 (down)
• 1{-6} Submicro, 1/4/2022, 4808.25 (down)
• 4{-7} Minuscule, 2/24/2022, 4101.75 (up)
• A{-8} Subminuscule, 2/24/2022, 4101.75 (up)

Learning and other resources. Elliott wave analysis provides context, not prophecy. As the 20th century semanticist Alfred Korzybski put it this way in his book Science and Sanity (1933), “The map is not the territory … The only usefulness of a map depends on similarity of structure between the empirical world and the map.” And I would add, in the ever-changing markets, we can judge that similarity of structure only after the fact.

See the menu page Analytical Methods for a rundown on where to go for information on Elliott wave analysis.

By Tim Bovee, Portland, Oregon, March 3, 2022

Disclaimer

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.

License

All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.

3:30 p.m. New York time

Half an hour before the market close. The S&P 500 futures rose to within two points of the February 28 high, 4399, which my analysis this morning had identified as the end of wave A{-8} and the beginning of downward wave B{-8}, the middle wave within the larger wave 4{-7} upward correction. If the price moves above 4399, then this morning’s analysis, which sees wave B{-8} as being underway, must be scrapped and replaced by the alternative, which sees wave A{-8} as being still underway. As of this time the B-wave-in-progress scenario stands. And under the alternative analysis, the only change is to the interpretation of the February 28 peak. The rest of the analysis applies to both scenarios. I’ve updated the chart.

10:30 a.m. New York time

OKE earnings play exit. I’ve exited my short bull put options spread on OKE for 24.8% of maximum potential profit and have updated the entry analysis with full results.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures rose from a 38.2% retracement back to a 50% retracement — both are Fibonacci levels — and then declined slightly before the opening bell.

What does it mean? The movement is consistent with my principal analysis from yesterday — the downward middle wave of an upward correction, which began on February 24, is now underway.

What’s the alternative? The upward correction ended at the February 28 high, and the subsequent decline is a resumption of the downtrend that began on January 4.

What does Elliott wave theory say? The decline from February 28 is wave B{-8} within an upward correction, wave 4{-7}, which began on February 24. All of that is happening within downtrending wave 1{-6}, which began on January 4. That 1st wave is contained within wave 1{-5} of wave A{-4}, which all began on that same day.

Wave B{-8} will be followed by upward wave C{-8}, the final wave in a three-wave corrective pattern. Under the rules of Elliott wave analysis the correction could end with the C wave. However, sometimes corrections have a compound structure, linking up to three corrective patterns together. If a compound correction forms, then upward wave C{-8} will be followed by downward wave X{-8}, which will connect the first corrective pattern with a second one. The parent wave is a 4th, and 4th waves have a greater tendency toward compound structures than do the other corrective waves, the 2nd.

When wave 4{-7} is complete, it will be followed by wave 5{-7}, which will fall below the end of the preceding 3rd wave, 4101.75 on February 24, perhaps significantly below that level. The end of wave 5{-7} will also end its parent, wave 1{-6}. The following wave 2{-6} will be an upward correction. Second waves tend to retrace a great deal of the preceding 1st wave, and so wave 2{-6} will present an opportunity to close out bullish positions before the magnitude of the subsequent wave 3{-6} decline puts the markets in panicky mood.

The alternative analysis sees the February 28 peak as the end of wave 4{-7} and the subsequent decline as the early stage of wave 5{-7}.

We Are Here.

These are the waves currently in progress under my principal analysis. Each line on the list shows the wave number, with the subscript in curly brackets, the traditional degree name, the starting date, the starting price of the S&P 500 E-mini futures, and the direction of the wave.

• 5{0} Intermediate, 12/21/2018, 2316.75 (up)
• 3{1} Minor, 3/23/2018 2174 (up)
• 5{-2} Minute, 10/4/2020, 4267.50 (up)
• 4{-3} Minuette, 1/4/2022, 4808.25 (down)
• A{-4} Subminuette, 1/4/2022, 4808.25 (down)
• 1{-5} Micro, 1/4/2022, 4808.25 (down)
• 1{-6} Submicro, 1/4/2022, 4808.25 (down)
• 4{-7} Minuscule, 2/24/2022, 4101.75 (up)
• B{-8} Subminuscule, 2/28/2022, 4399 (down)

Learning and other resources. Elliott wave analysis provides context, not prophecy. As the 20th century semanticist Alfred Korzybski put it this way in his book Science and Sanity (1933), “The map is not the territory … The only usefulness of a map depends on similarity of structure between the empirical world and the map.” And I would add, in the ever-changing markets, we can judge that similarity of structure only after the fact.

See the menu page Analytical Methods for a rundown on where to go for information on Elliott wave analysis.

By Tim Bovee, Portland, Oregon, March 2, 2022

Disclaimer

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.

License

All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 futures continued their decline during the day, reaching below the 38.2% retracement level. That’s a deep enough decline for me to switch the chart to showing the February 28 peak as the end of wave A{-8}, the first wave within the upward correction that began on February 24, wave 4{-7}. The downtrend that followed that peak is wave B{-8}, and it will be followed by wave C{-8} to the upside, which most likely will complete the wave 4{-7} correction. It’s possible that the correction will take a compound form, which links two or three corrective patterns together, and that would stretch the correction out for a longer time. After the correction is over, the downtrend will resume as wave 5{-7} to the downside, which will move below the February 24 low of 4101.75.

10:30 a.m. New York time

KR earnings play exit. I’ve exited my short bull put vertical spread on KR, an earnings play, for 25% of maximum potential profit and have updated the trade analysis with full results.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures reached a high of 4399 in overnight trading, just below the 61.8% Fibonacci retracement level, and then retreated slightly.

What does it mean? Under my principal analysis, the first wave of the upward correction that began February 24 is still underway. The analysis will be proven if the price rises above 4399 and then, when the first wave is complete, declines in a second wave with three waves internally.

What’s the alternative? The high of February 28 marks the end of the entire correction and subsequent decline is a resumption of the downtrend that began on January 4. If the price declines in five waves, it adds credence to this scenario, and the lower the price goes, the more likely it becomes. A decline below the February 24 low, 4101.75, would be an unquestionable confirmation.

What does Elliott wave theory say? Under the principal analysis wave A{-8} within wave 4{-7} is still underway, although it may have ended at 4399, the overnight high. Under the alternative analysis, the overnight high marked the end of wave C{-8} within wave 4{-7}, and the downtrend has resumed with wave 5{-7}, which will carry the price below 4101.75, the endpoint of wave 3{-7}. and perhaps significantly below that level.

We Are Here.

These are the waves currently in progress under my principal analysis. Each line on the list shows the wave number, with the subscript in curly brackets, the traditional degree name, the starting date, the starting price of the S&P 500 E-mini futures, and the direction of the wave.

• 5{0} Intermediate, 12/21/2018, 2316.75 (up)
• 3{1} Minor, 3/23/2018 2174 (up)
• 5{-2} Minute, 10/4/2020, 4267.50 (up)
• 4{-3} Minuette, 1/4/2022, 4808.25 (down)
• A{-4} Subminuette, 1/4/2022, 4808.25 (down)
• 1{-5} Micro, 1/4/2022, 4808.25 (down)
• 1{-6} Submicro, 1/4/2022, 4808.25 (down)
• 4{-7} Minuscule, 2/24/2022, 4101.75 (up)
• A{-8} Subminuscule, 2/24/2022, 4101.75 (up)

Learning and other resources. Elliott wave analysis provides context, not prophecy. As the 20th century semanticist Alfred Korzybski put it this way in his book Science and Sanity (1933), “The map is not the territory … The only usefulness of a map depends on similarity of structure between the empirical world and the map.” And I would add, in the ever-changing markets, we can judge that similarity of structure only after the fact.

See the menu page Analytical Methods for a rundown on where to go for information on Elliott wave analysis.

By Tim Bovee, Portland, Oregon, March 1, 2022

Disclaimer

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.

License

All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.

ONEOK Inc. (OKE)

Update 3/2/2022: I exited my short bull put vertical options spread on OKE, 43 days before expiration, for a $0.94 debit per contract/share, a profit before fees of $31 per contract. Shares were trading at $66.34, up $1.99 from the entry level.

The Implied Volatility Rank at exit was 27.0, down half a point from the entry level.

I exited because the position reached 25% of maximum potential profit, my normal exit point for earnings plays.

Shares rose by 3.1% over two days for a +564% annual rate. The options position produced a 33.0% return for a +6,019% annual rate.

---

I have entered a short bull put options spread on OKE, using options that trade for the last time 45 days hence, on April 14. The premium is a $1.25 credit per contract share and the stock at the time of entry was priced at $65.46.

The Implied Volatility Ratio stood at 27.5%.

Premium:	$1.25	Expire OTM
OKE-bull put spread	Strike	Odds	Delta
Puts
Long	57.50	78.0%	17
Break-even	63.75	67.5%	27
Short	62.50	57.0%	37

The premium is 50% of the width of the position’s short/long spread. The profit zone covers a 0.9% move to the downside and an unlimited move to the upside.

The risk/reward ratio is 3:1, with maximum risk of $375 and maximum reward of $125 per contract.

How I chose the trade. The trade was placed to coincide with OKE’s earnings announcement, after the closing bell on the day of entry. The short strikes were set to coincide with the expected move of $0.47 either way, based on options pricing, which gives a price range of $64.20 to $65.14.

By Tim Bovee, Portland, Oregon, February 28, 2022

Disclaimer

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.

License

All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.

The Kroger Co. (KR)

Update 3/1/2022: I exited my bull put vertical options spread on KR, 44 days before expiration, for a $0.66 debit per contract/share, a profit before fees of $22 per contract. Shares were trading at $48.45, up $1.83 from the entry level.

The Implied Volatility Rank at exit was 98.6%, down 3.4 points from the entry level.

I exited because the position reached 25% of maximum potential profit, my normal exit point for earnings plays.

Shares rose by 3.9% over one day for a +1,433% annual rate. The options position produced a 33.3% return for a +12,167% annual rate.

---

I have entered a short bull put options spread on KR, using options that trade for the last time 45 days hence, on April 14. The premium is a $0.88 credit per contract share and the stock at the time of entry was priced at $46,62.

The Implied Volatility Ratio stood at 102%.

Premium:	$0.88	Expire OTM
KR-bull put spread	Strike	Odds	Delta
Puts
Long	40.00	85.0%	11
Break-even	44.88	73.5%	21.5
Short	44.00	62.0%	32

The premium is 44% of the width of the position’s short/long spread. The profit zone covers a 3.7% move to the downside and an unlimited move to the upside.

The risk/reward ratio is 3.5:1, with maximum risk of $312 and maximum reward of $88 per contract.

How I chose the trade. The trade was placed to coincide with KR’s earnings announcement, before the opening bell on the day after entry. The short strike was set to coincide with the expected move of $2.97 either way, based on options pricing, which gives a price range of $43.64 to $49.58.

By Tim Bovee, Portland, Oregon, February 28, 2022

Disclaimer

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.

License

All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 futures moved 1.25 points, so far, above January 25’s high, to 4385.50, as noted in the 1:05 p.m. entry, requiring a change in the principal analysis At this point I’m sticking with the new principal analysis: The upward correction that began on February 24 is still underway and is in its first leg. Elliott terminology: Wave A{-8} within wave 4{-7} is still underway. Of this morning’s alternatives (see the What Does It Mean and What Are the Alternatives sections, below): Alternative #1 is the new principal analysis. The old principal analysis is now the new Alternative #1. And since the price has declined from today’s high, Alternative #2 is still in play.

2:25 p.m. New York time

OKE earnings play entry. I have entered a short bull put options spread on OKE and have posted an analysis of the trade.

2:10 p.m. New York time

KR earnings play entry. I’ve entered a short bull put options spread on KR and have posted an analysis of the trade.

1:05 p.m. New York time

Rise to a new high for the day. The futures price reversed and rose above the January 25 high, 4384.25, to 4385.50, so far. This knocks out my principal analysis and replaces it with Alternative #1: The first leg of the upward correction continues. In Elliott terms, wave A{-8} within wave 4{-7} is still underway. I’ve updated the chart below, moving a bit closer in for clarity.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures gapped downward when trading resumed Sunday evening at 4299.50, opening 81 points below Friday’s close.

What does it mean? The first leg of the low-level upward correction that began on February 24 ended the next day just below the 61.8% Fibonacci retracement level, and the second leg, to the downside, has begun. The price will remain above the January 24 low, 4212.75.

What are the alternatives? There are two:

Alternative #1: The decline from the February 25 high could be a subwave of a continuing 1st leg of the correction.

Alternative #2: The correction could have ended at the February 25 high and the downtrend has resumed today.

What does Elliott wave theory say? Under my principal analysis, wave A{-8} within wave 4{-7}, both to the upside, peaked on Friday, and wave B{-8} to the downside has begun. Under the rules of Elliott wave analysis, a 4th wave cannot move beyond the end of the preceding wave 1. Wave 1{-7} ended at 4212.75 on January 24, and wave B{-8} will remain above that level.

Alternative #1 sees the downward gap as a subwave correction within wave A{-8}, which is still climbing. This scenario will be confirmed if the price moves above the February 25 high, 4384.25.

Alternative #2 sees wave 4{-7} as having ended at the February 25 high, the endpoint of the child wave C{-8}. The decline that began from that high is an early movement within wave 5{-7} to the downside. There are two ways to in which this scenario can be confirmed: Wave B{-8} will have three subwaves, and a wave 1{-7} will have five subwaves. Also, if the price moves below the start of wave 1{-7}, at 4212.75, then Alternative #2 is confirmed.

We Are Here.

These are the waves currently in progress under my principal analysis. Each line on the list shows the wave number, with the subscript in curly brackets, the traditional degree name, the starting date, the starting price of the S&P 500 E-mini futures, and the direction of the wave.

• 5{0} Intermediate, 12/21/2018, 2316.75 (up)
• 3{1} Minor, 3/23/2018 2174 (up)
• 5{-2} Minute, 10/4/2020, 4267.50 (up)
• 4{-3} Minuette, 1/4/2022, 4808.25 (down)
• A{-4} Subminuette, 1/4/2022, 4808.25 (down)
• 1{-5} Micro, 1/4/2022, 4808.25 (down)
• 1{-6} Submicro, 1/4/2022, 4808.25 (down)
• 4{-7} Minuscule, 2/24/2022, 4101.75 (up)
• {B-8} Subminuscule, 2/25/2022, 4384.50 (down)

Learning and other resources. Elliott wave analysis provides context, not prophecy. As the 20th century semanticist Alfred Korzybski put it this way in his book Science and Sanity (1933), “The map is not the territory … The only usefulness of a map depends on similarity of structure between the empirical world and the map.” And I would add, in the ever-changing markets, we can judge that similarity of structure only after the fact.

See the menu page Analytical Methods for a rundown on where to go for information on Elliott wave analysis.

By Tim Bovee, Portland, Oregon, February 28, 2022

Disclaimer

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.

License

All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.

3:30 p.m. New york time

Half an hour before the closing bell. The S&P 500 futures rose during the day, pushing above the 50% retracement level. The rise puts the price within the target range for the present correction — between the 50% and the 78.6% retracement levels (4354 to 4494.50).

That target level is for the entire correction, wave 4{-7}. By this morning’s count, the entire rise has been wave A{-8}, the first leg of the parent 4th wave. The rise so far can be seen either a wave A{-8} with five subwaves, or as the entirely of wave 4{-7}, with three subwaves, one of which is a very small B wave.

The wave-A-only scenario means that correction is taking the form of a Zigzag, the same form as the previous 2nd wave correction. Normally waves 2 and 4 have different patterns, but not always. So it’s a tendency, not a rule.

The full-wave-4 scenario has a B-wave that is only 62.5 points long. Elliott wave analysis focuses on the length of wave B in relation to wave A. The A wave in this scenario is 188.25 points long. So wave B has retraced 33.2% of wave A. In Zigzags, B waves typically retrace 38% to 79% of the preceding A waves, so this B wave is coming up a bit short. In Flats, the B wave retraces 100% to 138% of wave A, and this wave B is coming in way too short.

So although those lengths are guidelines and not rules, I think it far more reasonable to treat the rise so far as wave A{-8}, with five internal waves, meaning that we’re tracing out a Zigzag correction to the upside and waves B and C lie in the future.

Bottom line: No change in the analysis. I’ve updated the chart.

11 a.m. New York time

LVS earnings play exit. I’ve exited my short bull put vertical options spread for 9.2% of maximum potential profit and have updated the trade analysis with full results.

9:37 a.m. New York time

What’s happening now? The S&P 500 E-mini futures overnight pushed above the 38.2% Fibonacci retracement level, paused (as in common at Fibonacci levels), and then rose past it.

What does it mean? The upward correction that began on February 24 continues and is in its first of three legs, the first one rising, the second one falling, and the third leg rising. The first upward leg has met the minimum requirements identified by Elliott wave analysis if the correction is a Flat pattern (three waves within the first wave), which is the most likely scenario. The second leg, also with three legs internally, could begin at any time. The entire correction, if it is typical, will end between the 50% and 78.6% retracement levels (4354 and 4494.50).

What’s the alternative? If the correction is forming a Zigzag, then the first internal wave will have five waves internally. The target range wouldn’t apply to a Zigzag. See more in the Elliott wave theory secvtion below.

What does Elliott wave theory say? The rise of February 24 is wave 4{-7} and within it, wave A{-8} is under way. Both the Flat and the Zigzag pattern have three subwaves — A, B, C — but differ in the number of waves within the subwaves.. For a Flat, the internal counts are 3-3-5, and for a Zigzag, 5-3-5. Wave 2{-7} was a Zigzag, and since 2nd and 4th waves tend to have different patterns, wave 4{-7} is likely to be a Flat. Wave A{-8} already has formed three waves internally, and so if the structure is a Flat, wave B{-8} can begin at any time.

Fourth waves have a tendency to end within the range of the 4th wave within the preceding 3rd wave — that is, between the start and end points in this case of wave 4{-9} in wave 3{-7}. That range is 4354 and 4494.50, coinciding with the 50% and 78.6% retracement levels.

We Are Here.

These are the waves currently in progress under my principal analysis. Each line on the list shows the wave number, with the subscript in curly brackets, the traditional degree name, the starting date, the starting price of the S&P 500 E-mini futures, and the direction of the wave.

• 5{0} Intermediate, 12/21/2018, 2316.75 (up)
• 3{1} Minor, 3/23/2018 2174 (up)
• 5{-2} Minute, 10/4/2020, 4267.50 (up)
• 4{-3} Minuette, 1/4/2022, 4808.25 (down)
• A{-4} Subminuette, 1/4/2022, 4808.25 (down)
• 1{-5} Micro, 1/4/2022, 4808.25 (down)
• 1{-6} Submicro, 1/4/2022, 4808.25 (down)
• 4{-7} Minuscule, 2/24/2022, 4101.75 (up)
• A{-8} Subminuscule, 2/24/2022, 4101.75 (up)

Learning and other resources. Elliott wave analysis provides context, not prophecy. As the 20th century semanticist Alfred Korzybski put it this way in his book Science and Sanity (1933), “The map is not the territory … The only usefulness of a map depends on similarity of structure between the empirical world and the map.” And I would add, in the ever-changing markets, we can judge that similarity of structure only after the fact.

See the menu page Analytical Methods for a rundown on where to go for information on Elliott wave analysis.

By Tim Bovee, Portland, Oregon, February 25, 2022

Disclaimer

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.

License

All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.