If you want to be successful at this, you need to spend some time looking at upgrades and downgrades, who is talking about what, who’s bullish on some tickers and why… Then you spend some time looking at the charts from the tickers you found above. You identify support and resistance, do we have some that could look bullish? Sometimes you’ll come up with one that shows a gap to fill. This is how I found TSCO.
Full disclosure, it was my first time trading it. This is why I gave it a little more than 2 weeks until expiration taking the 12/31 options.
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Same as the CAT play posted a few posts back, I had an alert going off as it crossed the previous resistance point. Others were talking about it, even Cramer was on it… Momentum was going to launch it through resistance.
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The complete gap to fill is where there was a dump and old bag holders are stuck with their shares. The idea is they might want to get a break even play once we get back to their level. That line was near 148.50. We chose the 150c knowing we could push towards it and at least get a good return on the gap fill.
We alerted on the break of resistance (previous peak on 12/1) and partial exit on the gap filled target for 82%. The plan worked.
Key points:
- look for news, upgrades and downgrades, who’s talking about what.
- look for potential breakouts or gap to fills.
- set an alert in your chart at the resistance level.
- have your target set before you enter your trade
