Trader’s Notebook

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 rose again after the overnight decline, remaining below Monday’s high, 4147.50, on the futures. No change in the analysis. The upward correction, wave 4{-12}, continues. I’ve updated the chart.

1:25 p.m. New York time

AMD earnings play entry. I’ve entered a bull put vertical spread on AMD, using options that trade for the last time on September 16, and have posted a trade analysis.

10:20 a.m. New York time

MOS earnings play exit. I’ve exited my bull put vertical spread on MOS for 49.4% of maximum potential loss and have updated the trade analysis with results.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures continued to move lower at a leisurely pace, reaching down into the 4080s.

What does it mean? Under my principal analysis, the upward correction that began on July 14 is still underway and internally is in the third leg of a three-part corrective pattern. The reversal is a correction within the third leg and will be followed by a rise above Monday’s high, 4147.25. Afterward, the price will fall back into the 3700s or lower.

What are the alternatives? The further the price falls, the more likely it is that the alternative analysis matches the chart: The upward correction ended on Monday at 4147.25. The downtrend has resumed and will carry the price back to the 3700s or lower.

[S&P 500 E-mini futures at 3:30 p.m., 160-minute bars, with volume]

What does Elliott wave theory say? Nothing new. The chart is singing the same tune it has sung for the past few days.

The upward correction that began on July 14, wave 4{-12} is still underway and is in the third wave, C{-13}, of three-wave corrective pattern. If wave 4{-12} forms a simple structure, containing one corrective pattern, then wave C{-13} will mark the end of wave 4{-12} and the correction. Wave 5{-12} to the downside will follow, resuming the downtrend that began on June 8, wave 5{-11}.

If wave 4{-12} forms a compound pattern, then wave C{-13} will be followed by a connecting wave, X{-13} and then a second corrective pattern. A compound correction can contain as many as three corrective patterns. Once the compound correction is over, wave 5{-12} to the downside will begin.

The alternative analysis says that wave 5{-12} began on Friday, from the day’s high, 4147.25. That high was where wave C{-13} and its parent, wave 4{-12}, both ended.

This is all happening within downtrending wave 5{-11}, which which is nested within a series of over larger waves, like Russian matryoshka dolls, as listed below in the “We Are Here” section.

Credit:Russian-Matroshka_no_bg.jpg: User:Fanghongderivative work: Greyhood (talk) – Russian-Matroshka_no_bg.jpg, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=13676809

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.

  • S&P 500 Index:
  • 5{+3} Supercycle, 7/8/1932, 4.40 (up)
  • 5{+2} Cycle, 12/9/1974, 60.96 (up)
  • 5{+1} Primary, 3/6/2009, 666.79 (up)
  • 5{0} Intermediate, 12/26/2018, 2346.58 (up)
  • 4{-1} Minor, 1/4/2022 4818.62 (down)
  • 1{-2} Minute, 1/4/2022 4818.62 (down)
  • S&P 500 Futures and index:
  • 1{-3} Minuette, 1/4/2022, 4808.25 (down) (futures), 4818.62 (down) (index)
  • S&P 500 Futures:
  • 1{-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, 3/29/2022, 4631 (down)
  • 5{-8} Subminuscule, 4/21/2022, 4509 (down)
  • 5{-9} Bitsy, 5/30/2022, 4202.25 (down)
  • 3{-10} Subbitsy, 6/2/2022, 4189 (down)
  • 5{-11} Deci, 6/8/2022, 4164 (down)

Learning and other resources. Elliott wave analysis provides context, not prophecy. As the 20th century semanticist Alfred Korzybski put it 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, August 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
Creative Commons 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.

MOS Trade

The Mosaic Co. (MOS)

Lot 2022-2

Update 8/2/2022: I exited my short bull put vertical spread on MOS, 26 days before expiration, for a $1.71 debit per contract/share, a loss before fees of $19 per contract. Shares were trading at $50.37, down $0.90 from the entry level.

The Implied Volatility Rank at exit was 64.3%, up 5.8 points from the entry level.

I exited on the day after entry because the position was unprofitable, trading for 49.4 of maximum potential loss. My practice for losing trades is to get out and move on. Analysts had expected earnings of $3.92 per share. They actually came in at $3.64 per share, a 7.1% miss.

Shares fell by 1.8% over one day for a -641% annual rate. The options position produced an 11.1% return for a -4056% annual rate.


I have entered a short bull put vertical spread on MOS, using options that trade for the last time 47 days hence, on September 17. The premium is a $1.52 credit per contract share and the stock at the time of entry was priced at $51.27.

The Implied Volatility Ratio stood at 58.5%.

Premium:$1.52Expire OTM
MOS-bull put spreadStrikeOddsDelta
Puts
Long44.0074.0%26
Break-even50.5265.0%31.5
Short49.0056.0%37

The premium is 60.8% of the width of the position’s short/long spread. The profit zone covers a 1.5% move to the downside and an unlimited move to the upside.

The risk/reward ratio is 2.3:1, with maximum risk of $348 and maximum reward of $152 per contract.

How I chose the trade. The trade was placed to coincide with MOS’s earnings announcement, after the closing bell on the day of entry. The short strikes were set to coincide with the expected move of $2.98 either way, based on options pricing, which gives a price range of $49.68 to $55.64. The Zacks Investment Research earnings surprise predictor gave MOS a score of 7.09%, with a rank of 3 (neutral).

By Tim Bovee, Portland, Oregon, August 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
Creative Commons 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.

Trader’s Notebook

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 moved slightly higher during the session, to 4147.25 on the futures, but has generally remained below that level.in the 4130s and 4120s. The higher high adds backing to this morning’s principal analysis: The upward correction that began on July 14 is still underway. In Elliott wave terminology: Wave 4{-12} is still underway, and internally it is nearing the end of the final wave, C{-13} of a corrective pattern.

I’ve updated the chart.

10:35 a.m. New York time

MOS earnings play entry. I’ve entered a short bull put vertical spread position on MOS, using options that trade for the last time on September 17, and have posted an analysis of the trade.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures remained below Friday’s high, 4144, when trading resumed overnight, fluctuating within and below the 4110s.

What does it mean? Under my principal analysis, the upward correction that began on July 14 is still underway and has an additional push to the upside left before reaching completion.

What are the alternatives? The upward correction ended on Friday at 4144 and the subsequent decline is the first tentative step in the resumption of the downtrend that began on June 28 from 4164.

[S&P 500 E-mini futures at 3:30 p.m., 150-minute bars, with volume]

What does Elliott wave theory say? Under the principal analysis, wave 4{-12}, an upward correction that began on July 14 from 3723.75, is still underway. Friday’s high marked a stopping point within wave 5{-14}, the final wave within the correction’s third internal segment, wave C{-13}. After a small downward correction, wave 2{-15}, wave 5{-14} will carry wave C{-13} to new heights and completion.

Wave C{-13} will be the end of wave 4{-12}, unless the correction takes a compound structure, linking together two or three corrective patterns. If wave 4{-12} forms a simple structure — one corrective pattern — then wave 5{-12} will follow the end of wave C{-13} and its parent, wave 4{-12}, carrying the price down into the 3700s or 3600s, and perhaps even lower. If wave 4{-12} forms a compound structure, then wave C{-13} will be followed by a connecting wave, X{-13}, and then another corrective pattern as wave 4{-12} continues.

Under the alternative analysis, Friday’s high marked the end of wave 5{-14} within wave C{-13}, and therefore the end of the upward correction, wave 4{-12}. Under this scenario, wave 5{-12} has begun its downward journey. At the smallest level, the alternative counts Friday’s high as the end of wave 5{-15} within wave 5{-14}.

All of this is happening within downtrending wave 5{-11}, which began on June 28 from 4164, within a nested series of increasingly larger downtrending waves stretching up to wave 4{-1}, which began on January 4 from 4818.62. Its parent, uptrending wave 5{0}, began on December 26, 2018 from 2346.58. See the “We Are Here” section for a full list of presently ongoing waves.

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.

  • S&P 500 Index:
  • 5{+3} Supercycle, 7/8/1932, 4.40 (up)
  • 5{+2} Cycle, 12/9/1974, 60.96 (up)
  • 5{+1} Primary, 3/6/2009, 666.79 (up)
  • 5{0} Intermediate, 12/26/2018, 2346.58 (up)
  • 4{-1} Minor, 1/4/2022 4818.62 (down)
  • 1{-2} Minute, 1/4/2022 4818.62 (down)
  • S&P 500 Futures and index:
  • 1{-3} Minuette, 1/4/2022, 4808.25 (down) (futures), 4818.62 (down) (index)
  • S&P 500 Futures:
  • 1{-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, 3/29/2022, 4631 (down)
  • 5{-8} Subminuscule, 4/21/2022, 4509 (down)
  • 5{-9} Bitsy, 5/30/2022, 4202.25 (down)
  • 3{-10} Subbitsy, 6/2/2022, 4189 (down)
  • 5{-11} Deci, 6/8/2022, 4164 (down)

Learning and other resources. Elliott wave analysis provides context, not prophecy. As the 20th century semanticist Alfred Korzybski put it 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, August 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
Creative Commons 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.

Trader’s Notebook

4 p.m. New York time

End of the session. The S&P 500 futures ended the session at 4144, a level last seen on June 9, which saw a high 25 cents above today’s peak. I’ve updated the chart.

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 has continued to rise during the trading session, reaching into the 4140s on the futures.

Under my principal analysis, yesterday’s high was the end of the middle wave within the rising last leg of a larger rising corrective pattern that began on July 14. The pull back was the small correction within the last leg, and the consequent rise is the final segment.

In Elliott wave terminology: Within wave C{-13}, yesterday’s high ended wave 3{-14}, the downward retracement was wave 4{-14}, and the subsequent rise in today’s session is wave 5{-14}, the final wave within the C wave. This is all happening with wave 4{-12}, the upward correction that began on July 14.

Bottom line: At this point we’re fishing for a top. Any fresh high can be seen as the end of wave 5{-14} and its parent and grandparent waves, C{-13} and most likely 4{-12}

No change in the analysis. I’ve updated the chart.

1:50 p.m. New York time

AAPL earnings play exit. I’ve exited my short bull put vertical spread on AAPL for 53.5% 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 continued to rise after yesterday’s closing bell, reaching a high of 4111 and then pulling back slightly.

What does it mean? By my count, the overnight high marks the end of the middle segment within the final leg of a corrective pattern that began on July 14. The middle segment will be followed by a pullback and then a push higher.

What is the alternative? It’s possible that the small pullback isn’t the end of the middle segment and that it will push higher before it’s done.

[S&P 500 E-mini futures at 4 p.m., 150-minute bars, with volume]

What does Elliott wave theory say? Under the principal analysis, the overnight high marks the end of rising wave 3{-14}, the middle of five waves within rising wave C{-13}, which in turn is the final wave of a three-wave corrective pattern and perhaps of the entire upward correction, wave 4{-12}, which began on July 14. Wave 3{-14} is followed by a wave 4{-14} pull back, which in turn will be followed by rising wave 5{-14}, which will bring waves C{-13} and its parent, wave 4{-12}, to completion.

Some 4th waves form compound corrections, connecting two or three corrective patterns. Most have only a single corrective pattern.

The alternative analysis recognizes that the pull back from yesterday’s high may not be wave 4{-14} but instead could be a movement of smaller degree. If that turns out to be the case, then wave 3{-14} has more upside ahead of it before it reaches completion.

In either vase, wave 4{-12} will be followed by wave 5{-12}, the final component of a downtrend, wave 5{-11}, that began on June 28.

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.

  • S&P 500 Index:
  • 5{+3} Supercycle, 7/8/1932, 4.40 (up)
  • 5{+2} Cycle, 12/9/1974, 60.96 (up)
  • 5{+1} Primary, 3/6/2009, 666.79 (up)
  • 5{0} Intermediate, 12/26/2018, 2346.58 (up)
  • 4{-1} Minor, 1/4/2022 4818.62 (down)
  • 1{-2} Minute, 1/4/2022 4818.62 (down)
  • S&P 500 Futures and index:
  • 1{-3} Minuette, 1/4/2022, 4808.25 (down) (futures), 4818.62 (down) (index)
  • S&P 500 Futures:
  • 1{-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, 3/29/2022, 4631 (down)
  • 5{-8} Subminuscule, 4/21/2022, 4509 (down)
  • 5{-9} Bitsy, 5/30/2022, 4202.25 (down)
  • 3{-10} Subbitsy, 6/2/2022, 4189 (down)
  • 5{-11} Deci, 6/8/2022, 4164 (down)

Learning and other resources. Elliott wave analysis provides context, not prophecy. As the 20th century semanticist Alfred Korzybski put it 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, July 29, 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
Creative Commons 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.

AAPL Trade

Apple Inc. (AAPL)

Update 7/29/2022: I exited my short bull put vertical spread on AAPL, 21 days before expiration, for a $0.93 debit per contract/share, a profit before fees of $107 per contract. Shares were trading at $161.24, up $6.12 from the entry level.

The Implied Volatility Rank at exit was 35.8%, down 5.4 points from the entry level.

I exited on the day after entry because the position reached 53.5% of maximum potential profit, well above my normal exit point for earnings plays, 25% of max.

Shares rose by 3.9% over one day for a +1,440% annual rate. The options position produced a 115.1% return for a +41,995% annual rate.


I have entered a short bull put vertical spread on AAPL, using options that trade for the last time 22 days hence, on August 19. The premium is a $2.00 credit per contract share and the stock at the time of entry was priced at $155.12.

The Implied Volatility Ratio stood at 41.2%.

Premium:$2.00Expire OTM
AAPL-bull put spreadStrikeOddsDelta
Puts
Long145.0076.0%22
Break-even154.5066.5%31.5
Short152.5057.0%41

The premium is 53.3% of the width of the position’s short/long spread. The profit zone covers a 0.4% move to the downside and an unlimited move to the upside.

The risk/reward ratio is 2.8:1, with maximum risk of $550 and maximum reward of $200 per contract.

How I chose the trade. The trade was placed to coincide with AAPL’s earnings announcement, after the closing bell on the day of entry. The short strikes were set to coincide with the expected move of $4.70 either way, based on options pricing, which gives a price range of $152.20 to $161.60.

By Tim Bovee, Portland, Oregon, July 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
Creative Commons 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.

Trader’s Notebook

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 rose throughout the day, with the futures reaching into the 4070s. The final leg of the upward corrective pattern that began on July 14 is still underway. In Elliott wave terminology, the correction is wave 4{-12}, and internally, it is in wave 3{-13}, the middle wave of a five-wave series. Third waves tend to be the strongest of the series, and today’s powerful push certainly illustrates that fact.

No change in the analysis. I’ve updated the chart below.

10:45 a.m. New York time

AAPL earnings play entry. I’ve entered a short bull put vertical spread on AAPL, using options that trade for the last time on August. 19, and have posted an analysis of the trade.

10:20 a.m. New York time

CHRW, EQT earnings plays exits. I’ve exited two short bull put vertical spreads, a day after entering the options positions, and have updated the analyses with full results. The trades were on CHRW and EQT.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures declined slightly overnight, rising slightly at the opening bell.

What does it mean? The pull back is the first of two within the rising final leg of an upward correction that began on July 14.

What is the alternative? It’s possible that the first leg of the correction is still underway. The higher the price rises today, the less likely the alternative will be.

[S&P 500 E-mini futures at 3:30 p.m., 140-minute bars, with volume]

What does Elliott wave theory say? Under the principal analysis, the upward correction, wave 4{-12}, is in its final segment, wave C{-13}. The C wave will have five waves internally, and I’m counting the overnight pullback as the second of those five waves.

Under the alternative analysis, the correction’s first wave, A{-13}, is still underway, and the pullback from July 22 and the subsequent rise are movements within that wave. The higher the price moves, the less proportional internal structure of wave A{-13} becomes and the less likely it is that the alternative analysis will match the chart.

In any case, wave C{-13} will most likely mark the end of the wave 4{-12} correction. If the correction forms a compound structure, linking two three corrective patterns together, then wave 4{-12} will have longer to go before reaching its end.

Wave 4{-12} will be followed by a resumption of the downtrend, wave 5{-11}, that began on June 28, in the form of wave 5{-12}, which will likely carry the price into the 3600s or lower.

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.

  • S&P 500 Index:
  • 5{+3} Supercycle, 7/8/1932, 4.40 (up)
  • 5{+2} Cycle, 12/9/1974, 60.96 (up)
  • 5{+1} Primary, 3/6/2009, 666.79 (up)
  • 5{0} Intermediate, 12/26/2018, 2346.58 (up)
  • 4{-1} Minor, 1/4/2022 4818.62 (down)
  • 1{-2} Minute, 1/4/2022 4818.62 (down)
  • S&P 500 Futures and index:
  • 1{-3} Minuette, 1/4/2022, 4808.25 (down) (futures), 4818.62 (down) (index)
  • S&P 500 Futures:
  • 1{-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, 3/29/2022, 4631 (down)
  • 5{-8} Subminuscule, 4/21/2022, 4509 (down)
  • 5{-9} Bitsy, 5/30/2022, 4202.25 (down)
  • 3{-10} Subbitsy, 6/2/2022, 4189 (down)
  • 5{-11} Deci, 6/8/2022, 4164 (down)

Learning and other resources. Elliott wave analysis provides context, not prophecy. As the 20th century semanticist Alfred Korzybski put it 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, July x, 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
Creative Commons 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.

CHRW Trade

C.H. Robinson Worldwide Inc. (CHRW)

Update 7/28/2022: I exited my short bull put vertical spread on CHRW, 22 days before expiration, for a $0.98 debit per contract/share, a profit before fees of $33 per contract. Shares were trading at $103.74, up $3.70 from the entry level.

The Implied Volatility Rank at exit was 62.5%, down 2.7 points from the entry level.

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

Shares rose by 3.7% over one day for a +1,350% annual rate. The options position produced a 33.7% return for a +12,291% annual rate.


I have entered a short bull put vertical spread on CHRW, using options that trade for the last time 23 days hence, on August 19. The premium is a $1.31 credit per contract share and the stock at the time of entry was priced at $100.04.

The Implied Volatility Ratio stood at 69.9%.

Premium:$1.31Expire OTM
CHRW-bull put spreadStrikeOddsDelta
Puts
Long92.5077.0%21
Break-even98.8168.0%29
Short97.5059.0%37

The premium is 52.4% of the width of the position’s short/long spread. The profit zone covers a 1.2% move to the downside and an unlimited move to the upside.

The risk/reward ratio is 2.8:1, with maximum risk of $369 and maximum reward of $131 per contract.

How I chose the trade. The trade was placed to coincide with CHRW’s earnings announcement, after the closing bell on the day of entry. The short strikes were set to coincide with the expected move of $5.65 either way, based on options pricing, which gives a price range of $94.18 to $104.48.

By Tim Bovee, Portland, Oregon, July 27, 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
Creative Commons 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.

EQT Trade

EQT Corp. (EQT)

Update 7/28/2022: I exited my short bull put vertical spread on EQT, 22 days before expiration, for a $1.05 debit per contract/share, a profit before fees of $20 per contract. Shares were trading at $46.25, up $1.01 from the entry level.

The Implied Volatility Rank at exit was 48.8%, up 2.7 points from the entry level.

The position failed to reach my target, 25% of maximum potential profit, and so I took the profit that was available, which was 16% of max.

Shares rose by 2.2% over one day for a +815% annual rate. The options position produced a 19.0% return for a +6,952% annual rate.


I have entered a short bull put vertical spread on EQT, using options that trade for the last time 23 days hence, on August 19. The premium is a $1.25 credit per contract share and the stock at the time of entry was priced at $45.24.

The Implied Volatility Ratio stood at 46.1%.

Premium:$1.25Expire OTM
EQT-bull put spreadStrikeOddsDelta
Puts
Long38.0081.0%15
Break-even44.2570.0%25
Short43.0059.0%35

The premium is 50% of the width of the position’s short/long spread. The profit zone covers a 2.2% 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 EQT’s earnings announcement, after the closing bell on the day of entry. The short strikes were set to coincide with the expected move of $4.67 either way, based on options pricing, which gives a price range of $40.48 to $49.82.

By Tim Bovee, Portland, Oregon, July 27, 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
Creative Commons 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.

Trader’s Notebook

3:30 p.m. New York time

Half an hour before the closing bell. The S&P 500 shot above Friday’s high, 4016.25 on the futures, into the 4040s, in a move that began before the Federal Open Market Committee increased the Fed Funds Rate by 75 basis points. Although the movement was triggered by an event, the market response must still fit within the rules and norms of Elliott wave analysis.

As indeed this response does. The rise above Friday’s high triggers the alternative analysis from this morning. It’s ambiguous, but the power of the rise tilts the analysis in favor of the third wave of the upward correction having begun from the overnight low, 3913.25.

In Elliott wave terminology: An upward correction, wave 4{-12}, which began on July 14, is still underway. Wave A{-13} within it ended on July 22 at 4016.25. Wave B{-13} ended today, July 27, at 3919.27, just a few cents above the usual range for a B-wave (as discussed in this morning’s analysis). Wave C{-13} is now underway. A C wave often about the same length as the preceding A wave. That would suggest that wave C{-13} will rise by 292.50 points, to 4202.75 — more or less; it’s a tendency, not a rule.

I’ve retained this morning’s chart for comparison and have posted a new one.

[New principal analysis: S&P 500 E-mini futures at 3:30 p.m., 135-minute bars, with volume]

2:40 p.m. New York time

BG earnings play exit. I’ve exited my short bull put vertical spread on BG for 45.3% of maximum potential loss and have updated the trade analysis with full results. https://timbovee.com/2022/07/26/bg-trade/

2:20 p.m. New York time

CHRW and EQT earnings plays entries. I’ve entered short bull put vertical spreads on CHRW and EQT, using options that trade for the last time on August 19, and have posted analyses of each trade: CHRW, EQT.

9:35 a.m. New York time

What’s happening now? The S&P 500 E-mini futures rose slightly in overnight trading, remaining in the mid-3900s.

What does it mean? The descending middle leg of the upward correction that began on July 14 is underway. If it’s typical, it will end somewhere between 3905 and 3795. It will be followed by an ascending final leg of the corrective pattern that most likely will rise above 4016.25, the price where the correction’s first leg ended.

What is the alternative? It’s possible that the price will rise above 4016.25 without falling any lower. If it does, then it will present the analysis with a huge ambiguity: Is the first leg of the correction still underway, or was rise the third leg of the correction following an unusually short second leg?

The chart. On the S&P 500 futures chart below, I’ve marked the most likely range for the descending middle leg of the correction to end, using dashed lines for the upper boundary, 3905.10, and the lower boundary, 3795.17. More on this in the Elliott wave theory section below.

[Outdated principal analysis: S&P 500 E-mini futures at 9:35 a.m., 135-minute bars, with volume

What does Elliott wave theory say? The decline from July 22 is wave B{-13} within an upward correction, wave 4{-12}. The correction began on July 14 from 3723.75.

Wave B{-13} will be followed by an upward wave C{-13}, which most likely will move above the end of wave A{-13}, at 4016.25.

How far wave B{-13} is likely to decline depends upon what form the overall correction is taking. The two most common forms are the Zigzag and the Flat, which with three waves internally. The type of form among those two is defined by the number of waves one degree lower within the A wave. If wave A has five waves internally, then the correction is a Zigzag. If wave A has three waves, then the correction is a Flat.

Wave A{-13} is, quite frankly, a bit messy. I can count it either way, but five-wave count seems less messy to me than does a three-wave count. So I consider wave 4{-12} to be a Zigzag.

In Zigzags, the B wave tends to retrace between 38% and 79% of the preceding A wave. Wave A{-13} has a length of 292.50. Therefore, wave B{-13} will end between 111.15 to 231.08 points below the end of wave A{-13}, giving price targets in the range of 3905.10 to 3795.17. Futures prices move in 25-cent intervals, so there will be some rounding on the chart as wave B{-13} progresses. And there is no guarantee that this Zigzag will behave typically. The 38% to 79% retracement is a tendency, not a rule.

Wherever it ends, wave B{-13} will be followed by ascending wave C{-13}, which typically will move above the end point of the preceding A wave: 4016.25.

Most likely, wave C{-13} will be the end of wave 4{-12}, which will be followed by wave 5{-12}, a resumption of the 5{-11} downtrend that began on June 28. An exception would be if wave 4{-12} formed a compound structure, linking two or three corrective waves together and delaying the start of wave 5{-12}.

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.

  • S&P 500 Index:
  • 5{+3} Supercycle, 7/8/1932, 4.40 (up)
  • 5{+2} Cycle, 12/9/1974, 60.96 (up)
  • 5{+1} Primary, 3/6/2009, 666.79 (up)
  • 5{0} Intermediate, 12/26/2018, 2346.58 (up)
  • 4{-1} Minor, 1/4/2022 4818.62 (down)
  • 1{-2} Minute, 1/4/2022 4818.62 (down)
  • S&P 500 Futures and index:
  • 1{-3} Minuette, 1/4/2022, 4808.25 (down) (futures), 4818.62 (down) (index)
  • S&P 500 Futures:
  • 1{-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, 3/29/2022, 4631 (down)
  • 5{-8} Subminuscule, 4/21/2022, 4509 (down)
  • 5{-9} Bitsy, 5/30/2022, 4202.25 (down)
  • 3{-10} Subbitsy, 6/2/2022, 4189 (down)
  • 5{-11} Deci, 6/8/2022, 4164 (down)

Learning and other resources. Elliott wave analysis provides context, not prophecy. As the 20th century semanticist Alfred Korzybski put it 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, July 27, 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
Creative Commons 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.

BG Trade

Bunge Ltd. (BG)

Update 7/27/2022: I exited my short bull put vertical spread on BG, 23 days before expiration, for a $1.78 debit per contract/share, a loss before fees of $71 per contract. Shares were trading at $90.39, down $5.03 from the entry level.

The Implied Volatility Rank at exit was 63.6%, down 29.5 points from the entry level.

I exited on the day after entry, at 45.3% of maximum potential loss, because I’ve rarely seen a losing position return to profitability. In my view, better to take the loss and move on. Analysts expected earnings of $3.40 per share; instead, the report was for 2.97 per share, a 43-cent miss.

Shares declined by 5.3% over one day for a -1,924% annual rate. The options position produced a -39.9% loss for a -14,559% annual rate.


I have entered a short bull put vertical spread on BG, using options that trade for the last time 24 days hence, on August 19. The premium is a $1.07 credit per contract share and the stock at the time of entry was priced at $95.42.

The Implied Volatility Ratio stood at 93.1%.

Premium:$1.07Expire OTM
BG-bull put spreadStrikeOddsDelta
Puts
Long85.0080.0%17
Break-even91.0772.5%24
Short90.0065.0%31

The premium is 42.8% of the width of the position’s short/long spread. The profit zone covers a 4.6% move to the downside and an unlimited move to the upside.

The risk/reward ratio is 3.7:1, with maximum risk of $393 and maximum reward of $107 per contract.

How I chose the trade. The trade was placed to coincide with BG’s earnings announcement, before the opening bell on the day after entry. The short strikes were set to coincide with the expected move of $7.43 either way, based on options pricing, which gives a price range of $86.91 to $101.77.

By Tim Bovee, Portland, Oregon, July 26, 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
Creative Commons 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.