After you do your fundamental Analysis you chose your ENTRY by Technicals. Technicals will NOT tell you what stock to buy or sell. Technical will not tell you expected earnings or what the daily True Range of the underlaying is. This will only do fundamental analysis.
We take a look at the DAILY Charts or even the weekly.
It became apparent that the ENTRY was chosen when GM tried to break through the $57 Level. But instead of breaking through it created a Double Top and retraced from thereon forth.
I usually start with the Fibonacci Retracement at Ground ZERO, which I define as most recent LOW or the Opening Price, or a Resistance or Support Level.
We can see that GM made a YUGE move in January 2021 hit the $57 Level and fell back. It hit the 50% level and tried a second time to break the $57 Level without success. There is no guarantee in any of these moves. It is all psychology!
In the same way as young adults pushing the limits just to fail over and over again the more experienced dudes lean back and think: Yeah, try it. I will come in the next wave when we are sure we broke the level. So the more experienced traders wait while the younger ones get burnt.
We rushed in too. Too early. We bought the Calendar Spread on February 8th, 2021. The game is NOT about how much money you can make but to stay in the game and make another day, week, month or year! Staying in the game. There have been THREE options at the GREEN TRIANGLE on FEB 08.
WAIT for break through and buy the DIP on the Retracement. Or
WAIT and wait for the failure to break, retracement and buy the DIP at the rebounce!
WAIT and if nothing of this happen then rethink and abandon the whole idea of BUYING.
Outcome of the wrong decision.
At one point the position was down by 60%. Not good! You cannot afford many of those, ever.
The trade is also going on for 19 days now, which represent 4 trading weeks! 5 days = 1 week.
Entering the position today with the same Strike and Expiration Date would have saved $900 on 4 contracts.
Buying the position when GM closed above Mid Bollinger at 53.50. The Option Price for the Call was about $5.00 a contract. Beside saving $900 for opening the position it also would have given us an additional P/L of about $330.
All over all without being detailed on the exact numbers, choosing the correct ENTRY is important. When you go to the casino you want to be the bank and have ALL ODDS in your favor. When you trade well you put ALL ODDs in your favor. You are the Bank.
The Details in the CALL Option
We still have 102 days to go. Plenty of time. All that matters is if the position will recover until expiration date. And I am absolutely convinced that GM will pull this off. Here is their new video.
GOOD NEWS TODAY?
The Biden Administration is spending more tax money on everything. Big companies will do well. All the new Green Agenda will bring billions of Dollars and subsidies to the automobile Industry.
Dow Jones hit the 32,000 Point level!!
Volatility is down.
The Germans are doing well.
S&P500 slightly up
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