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Monday, August 20, 2007

Anatomy of OIH Intraday

Had problems posting pictures for the past few days, so this is a delayed post on OIH on 16/8, Thursday. OIH intraday presented several textbook style plays - first to the downside, then up. Classic!

The above is 15 min chart. Green dotted lines represent potential support/resistance areas. The 1st two bars printed long upper tails with resistance at 5EMA. After breaking down, it tested the opening range low (ORL) with a bear flag. Unable to break, it then continued its fall steadily, reaching the 38.2% & 50% Fibonacci extension price target

Zooming into the 5 min chart above, if you hadn’t taken profit at the Fibonacci extensions, hammers appearing at the key level $155 would have prompted you to do so. Hammers at key levels are good indication of reversal.

Although this PUT option trade turned out nicely, there were 2 drawbacks:
1) Then entry point is not low risk, as the stop is placed at high of the 1st 2 bars, meaning a risk of $2 move on the OIH
2) The Natural Gas data which is released every Thurs at 10.30am ET (there was delay yesterday, released about 11.13am ET from Briefing.com) may have impact on OIH. That was the point where we see a test of ORL. It could have gone the other way and break back up of ORL

A nice reversal opportunity if you spotted it just before the 1.10pm ET bar as it broke the down trend line and also a resistance. Coupled that with the hammers I mentioned earlier, this is a high probability trade. It is always good to partial take just before round number, in this case $160. See that it did stalled at about $159.7 between 1.35pm ET to 2.10pm ET – this also happened to be where the 20EMA on 15 min chart is located. Always look at 2 different time frames when having day trades. OIH then went on to test the ORL again.




Thanks for sharing the trade. Nice trade!
I think you're such a skillful options day trader. Able to take advantage of intraday movements (both up & down) in this volatile situation.
Looking forward to your trade sharing again in the future. :)


6:31 PM  
Blogger Simply Options Trader said...

Thanks OTB. I didn't take the upside of the trade though, but showing how it can be done.

I'm far from skillful...still learning each day :) It is not easy to day trade an options due to the spread. Best to keep a small watchlist and be familiar with them for day trading purpose.

11:18 AM  

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