Last update: August 2021

Howdy Tackle Traders,

I grew up an eighties kids and in a household of six with only one TV to share, fighting over what to watch was a constant battle in our house. As kids we’re battling for MTV and my dad would veto that for CNN every time. Sometimes my mom would do us a solid get dad to allow us to watch want we wanted but every five minutes he’d yell out “my goodness, what is this nonsense” for nothing we ever watched or listened to ever made sense. There was also fighting amongst us siblings too. My sister and I were forever fighting for the remote with our brothers who wanted to play video games all day. Eventually, mom would intervene and it was TV off unless we could agree on one thing to watch. On a few rare occasions, you would find us hunched over the couch catching the few TV shows we all liked. The one show I can recall was Family Matters. It didn’t matter who was watching what but when Family Matters was on our eyes were set on what Steve Urkel was going to blow up or break and wait for him to say “ oops did I do that”. Followed by Carl aka big guy yelling as loud as he can; “get out, get out, get out!”

Well, I certainly had an Urkel moment in the market last week on a swing trade that was a big oops and luckily I live to tell it. So here’s what happened…I had WDC on my bear watchlist after sitting on a low base for almost the entire month of August. It finally broke support and I missed that move down but I was patient enough to wait for the retracement and on 9/25 I entered my trade. My entry was below the previous day low of 59.50 and when the stock price went below that I bought the 18 Jan 19 57.5 Puts for $3.70 per contract. My target was at a key support level of about $53 and a tight stop loss in the $60 zone. I ended up exiting the trade early because I didn’t like what I saw on 10/1. Volume was up on two green candle days and it was starting to form another low base and I didn’t want t my capital sitting out there while it was trying to pick a direction. I sold the puts to exit the trade at $4.10 for a small profit of .40cents per contract.

I still liked the overall downtrend of the stock and therefore kept it on my watchlist to trade down but this time I wanted better confirmation for me to enter it again and was willing to be patient and wait until it broke the major support line around $53.60. I placed a contingent order to buy the same 18 Jan 19 57.50 puts when WDC was at or below $53.41. I’d like to say that I saw the ice burg ahead called earnings but I honestly don’t remember. If I saw it I probably told myself I was going to be out the trade well before earnings on 10/25. Needless to say, the order was in and it was now a waiting game. The following week starting on 10/8 while the rest of the market was taking a pounding, WDC was sitting on the sidelines eating popcorn. It almost got pulled into the bear fight but it held support and formed another low base only to retrace back up rather than break support. I was not aware of this at the time for I was tending to my other patients that were actually on the battlefield such as the RUT lol!

Anyway, I had forgotten all about WDC but little did I know it had its day in the ring coming. Fast forward to 10/24 when at approximately 1:09 pm, WDC finally broke support and I got triggered into the trade. When it happened I was on a flight to Dallas and only became aware after I landed and got the alert on my phone. I didn’t think anything of it that was just another automated order that I had obviously prepped for and the stock did what it was supposed to do hence the reason I got triggered into the trade. The following morning like I always do when I’m not able to access my computer, I checked on my trades from the think or swim app on my phone and went on about my day. I prefer to run all my trades and trade management on my laptop, not on my phone. I checked to see how the market closed to determine if I need to make adjustments for the following day but the market didn’t do much that day. The following day I was again not in front of the computer so I did a quick glance on my phone and that’s when WDC caught my eye. I knew that the trade was doing well based on the overall market opening low but even with the market down those numbers were too good to be true. I checked the chart and low and behold there was a big gap down and instantly I knew what had happened. Yup, you guessed it EARNINGS! There was my Urkel moment. I got into a directional trade 2 days before earnings paid a high premium for the option and I wasn’t even aware of the earnings. Yes, I did that. Fortunately, the trade went in my favor and as I said the Urkel famous phrase in my head, I the ‘get out’ voice was just as loud and I did.

So there you have it, folks! Lesson learned from this all is to remember to and cancel any orders that haven’t trigged in the time you were expecting them to. If you decide to let them linger please don’t forget to check for earnings. This was an oops gone good but I can tell you they don’t always pan out that way. I’m happy this one worked out well.

Until next time traders!

Emily Muiruri

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