Trading NNOX - High Risk High Reward Short
Free short trade idea for those willing to take the risk, seeking big rewards.
Why not add one more trade idea for the week and make it available to everyone?
This one is a high risk, high reward short trade in a stock that enjoys a lot of trading volume and has recently gapped up and started selling off.
I am talking about NNOX, which looks like it wants to continue its decline ahead of earnings.
The options contracts will allow time through mid-April for the trade to play out, but if shares reverse and start moving higher I would expect these call options to quickly become worthless.
That makes this an all or nothing trade.
Starting with the chart, the ultimate goal is the gap fill down to 7.13.
Now let’s get to my trading plans.
Notes:
NNOX either rejects near resistance and the downtrend line or breaks out above and starts moving higher.
The trend is to the downside, which is the stronger set up and trade I am targeting for the coming weeks.
Options expire in April which is weeks after earnings are reported on March 22nd. Considering taking most of the position off ahead of earnings.
Action:
Bulls are looking for a break above 11, taking entry on a retest of this level ahead of more upside. I am unlikely to take this trade.
Bears are looking for an attempt to move higher met with rejection between 10.00-10.50.
Targets:
Upside targets are 11, 11.85, 12.97.
Downside targets are 8.63, 7.13, 5.89.
Execution:
Breakout Trade -
Considering the April 19th, 10.00 strike call options on a break above 11.00 and retest of this level, taking entry on the bounce.
Stop loss at 10.00 or 50% loss on the options contract. These may simply drop to zero on a move in the wrong direction.
Breakdown Trade -
Considering buying the April 19th, 7.50 strike put options on a retest and rejection between 10.00-10.50. Looking for shares to push into this area of resistance and start to struggle, using that time to enter puts.
Stop loss at 11.00 for this short trade or 50% loss on the options contract.
This is how I map out the trades I am considering every week, typically for at least two stocks which gives you about ten trades every month.
That is less that $1 per trade idea.
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Have a great day trading and let me know if you have any questions about this trade!
-Nate
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This service is for general informational and educational purposes only and is not intended to constitute legal, tax, accounting or investment advice. These are my opinions and observations only. I am not a financial advisor.