Saturday, January 18, 2020

FISV Swing Trade

On Friday Jan 17 we closed FISV put credit spread for  win. In this post I will try to explain the strategy I used for this trades, and the same strategy that I use to share my trades on the free whatsapp group that I have which is open to anyone who would like to join.

In short, I scan everyday the stocks for 5 closes below or above a modified bolling band of standard deviation of 0.382 a well as the 50 SMA. 

On January 9, FISV came up on my scanner by showing 5 closes on the daily candles above the modified bollinger bands and 50 sma. 


I placed a trigger above the highest of these 5 candles at 118.02 which was the 1 cent above the high of the 5th candle which was the highest from these 5 candles. 



In the above chart the blue line is the 50 SMA, and the green and red lines are the modified bollinger bands. So after I place the trigger at 118.02 I add this ticker to a watch list so that I check it everyday after the close if the trigger is not triggered. If any day a candle close in the modified bollinger bands I cancel the trigger and wait for another signal. if FISV trade at 118.02 or higher any day after the 5th candle that is when I enter a PUT credit spread (bullish strategy) 30 DTE and either ATM or 1 strike away. 

On January 10 I got an alert at 844am that FISV is trading at that price. It does not matter if it closes above that price as long as FISV trade at that price or higher then the strategy kicks in. 



In the above chart, FISV gapped up on Jan 10 thus alerting us that the trigger been triggered and we entered the trade. 

Opening:


STO -1 VERTICAL FISV 100 21 FEB 20 115/110 PUT @1.15



the above option is betting that FISV by feb 21 will be above 113.85 which is our breakeven and our stop loss will be double the credit received so when this spread cost 2.3 we will buy it back and our loss will be 1.15 only. Since we sold this option at 1.15 we plan to buy it back at 25% profit or when the spread cost 0.8. As long as price stay above our breakeven price of 113.85 the spread will loose value and eventually expire worthless but I personally like to take 25% profit on these trades, free up some buying power and enter another trade. 

The reason I go 30 DTE is to give the ticker some time to move around since this is a momentum strategy sometimes it takes time for the momentum to kick in 80% of the time. Some tickers like to go test the 50 SMA before they move with the momentum of this strategy and as long as the cost is not double I stay in this trade and do not close it out. 

As you can see in the chart below that FISV went against us for 3 trading days before it started moving in our favor and all this time I just keep the trade open and check the cost to make sure my stop loss did not trigger. 


Last friday January 17 2020  at 249pm the price target was met at 25% profit and we closed this trade by buying back the spread for 0.8 and profiting $35 per contract on this trade. 

Closing win:

BTC +1 VERTICAL FISV 100 21 FEB 20 115/110 PUT @.80

Profit: $35 profit per contract. 

This trade require patience and require to stick to the rules because a lot of time the price will go against you before it bounce back again but as long as you are not loosing double the credit received you should stay and let the probabilities play their role. 

From my experience last year trading this strategy and sharing it on my whatsapp group that it works 80 % of the time and the other 20% it will be a looser but as long as you manage your losses the profits will be way higher than the loss you might get from it. 

Hope this help the members of the whatsapp group and other people reading this post understand the kind of trades I share on the free whatsapp group that I have that is based on this strategy only. 

If you would like to join my free whatsapp group and be notified when I open or close a trade please click the link below: