I thought our CROX trade was the “little engine that could” as we saw in last week’s write-up, but that was a grossly underestimated description of this trade. This trade is turning into the heavyweight champion of trades!
The CROX trade has given us everything we could have wanted and much more. We have had a few ups and downs to deal with in this trade but really this trade has given us more than we could have expected.
We use this trade precisely for the ability to hit home runs like this but we are also managing our expectations as we never know if that home run will come through or whether we will have to settle for a base hit. By the way base hits can make a lot of money in the markets.
Swinging for the fences on every trade is a sure-fire way to go broke and instead it’s prudent to let the trades come to us. CROX has done exactly that, again. Last week we were still sitting in a negative P/L position to the tune of approximately $450. We talked about a couple of different things that could happen. Essentially, CROX can only do one of two things, it can pull back from the upper channel trendline or it can break above it? We discussed how either of these two scenarios works for us. A breakout of the upper trendline gets us some sweet delta and a pullback to support allows us to collect theta for the next couple of months.
There was another scenario that I hadn’t mention and that is the best of both worlds. We get the sweet shot of delta and still continue to collect theta until the trade runs its course.
There is a reason we titled this week’s blog as the heavyweight champion of trades and that is because she is still giving to us in both ways. So, check out this week’s video to see what we are going to do with this trade as it stands now.
Coach “Old Money” Holmes