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Well, the “buy the dippers” are back in full force after bank earnings and Moderna (MRNA) vaccine news…

And it looks like this momentum can continue.

Of course, there are stocks I want to have a bullish position on, but they may be too rich at these levels.

I mean the dollar value on some of these stocks is insane and the options premiums are juiced.

I’m a firm believer that with all the traders who piled into the market recently, there are some “suckers” placing random bets.

Now, there is a way to take advantage of these “sucker bets” with defined risk…

And I want to show you the strategy I used to lock in $6K on two trades on Tuesday.*

How I “Stole” $6K From The “Suckers” In LULU and MTCH

 

On Tuesday, I noticed there were a lot of opportunities after it made a dip. I figured it was the same story over and over again…

Stocks take a drop and quickly rebound. That’s kind of been the theme over the last few months.

Once I noticed that I figured I would look to establish a bullish opinion on some names I’ve been watching.

However, there was still potential for a further dip. So rather than buying calls or shares outright in these names, I used what is known as a bull put spread.

Why?

Well, with a bull put spread, I’m essentially betting where a stock won’t go.

For example, Lululemon (LULU) was one stock on my radar.

 

Source: StockCharts

 

If you look at the chart above, LULU was in a bull flag pattern on the daily chart, and there were key levels that could act as support.

More specifically, I was looking at the 34-period exponential moving average (EMA) as a key support level. The 34 EMA has held before, and I figured it would hold again.

Now, there were two ways to play this…

I could’ve sold the $295 puts, while simultaneously purchasing the $290 puts.

I could’ve sold the $300 puts, while simultaneously purchasing the $295 puts.

I opted for the latter trade.

By establishing that bet, I stacked the odds in my favor, in my opinion. You see, LULU could’ve dropped a little, or even stayed sideways, I was in a position to profit. If the stock popped, I would capitalize on the drop in the put premium.

Why did I opt for the $300 / $295 put spread?

I had a high conviction and wanted to get aggressive.

Well, that bet paid off… and I was able to lock in a 32% winner, or about $4,500 in realized gains in a matter of hours.

 

 

I also followed a similar approach with Match Group Inc. (MTCH).

 

Source: StockCharts

 

The 34 EMA has held as a support level for MTCH multiple times over the last few months, and I figured that area would allow me to establish a bullish opinion.

With MTCH, I sold the $97 / $95 put spread.

Basically, I believed MTCH would stay above $97…

And in just a matter of hours, MTCH caught a pop, and I was able to lock in a 27% winner, or about $1,500 in realized gains.

 

 

Now, if you want to learn more about this risk-defined strategy that allows me to trade high-dollar names without breaking the bank…

Then you’ll want to check out my latest eBook, Wall Street Bookie.

Inside, you’ll find case studies on my number 1 edge in the options market, and the strategy I use to take advantage of the “sucker bets”.

Claim your free copy here.

 

 

*Results presented are not typical and may vary from person to person. Please review our full disclaimer located at ragingbull.com/disclaimer.

Author: Jason Bond

Jason taught himself to trade while working as a full-time gym teacher; his trading profits grew eventually allowed him to free himself of over $250,000 in student loans!

Now a multimillionaire and a highly skilled trader and trading coach, Over 30,000 people credit Jason with teaching them how to trade and find profitable trades. Jason specializes in both swing trades and in selling options using spread trades, which balance the risk of selling options. Jason is Co-Founder of RagingBull.com and the RagingBull.com Foundation which donates trading profits to charity. So far the foundation donated over $600,000 to charity.

One of the hottest momentum stocks in the market now is Tesla Inc (TSLA)… and the stock can go through violent moves, in either direction.

It’s one of the most hated, and most loved stocks.

The stock has an 8.59% short interest, which is a lot for a mega-cap.

At the same time, retail traders are piling into TSLA…

With more than 25K Robinhood traders adding the name to their account over the last 24 hours.

 

Source: RobinTrack

 

Who’s going to be right?

I don’t really care because I’ve figured out a way to play upside and downside momentum.

Of course, buying momentum stocks and locking in gains is easier when the market is on a remarkable run…

That’s why I want to show you how to take advantage of pullbacks in momentum stocks with a real money case study in TSLA.

On Monday, even though I had a dentist appointment and was off the desk, I was able to lock in a 46.58% winner in TSLA puts*.

How did I do it?

How I Locked In Nearly 5-Figures On TSLA In A Matter Of Hours…

 

I know what you’re thinking…

Who would really want to bet against TSLA at these levels?

I’m not going out on a limb saying TSLA will tank… I’m just trying to take advantage of the short-term momentum.

Now, we all probably know TSLA is a hot stock, so how would one know when and how to bet against it?

For me, it’s simple…

I just look at the charts.

 

Source: thinkorswim

 

With TSLA, I noticed how the stock tried to get above $1,800, but failed. Thereafter, it tried to make a move higher, but failed again.

At that time, TSLA was actually forming a short-term downtrend.

When I notice this, I like to focus on the price action. As you can see, on the 1-minute chart, TSLA was making lower highs and lower lows.

The stock held that short-term downtrend line, and after it bounced into it, I bet against TSLA.

However, I didn’t short shares because that would eat at my capital and it would be dangerous.

So what did I do instead?

I bought at-the-money (ATM) puts to take advantage of the momentum.

Of course, TSLA is a wild stock… and can move with the market, so I looked at the SPDR S&P 500 ETF (SPY) to see if it was moving in tandem.

Well, what do you know?

SPY was teetering, and I actually bought puts on SPY (but that’s a lesson for another day).

 

Source: thinkorswim

 

The whole idea here is to understand that there are pockets in which traders can take advantage of the downside momentum.

With TSLA pulling back, and tech stocks selling off, as well as the SPY rolling over…

It didn’t take long for TSLA to gain downside momentum.

In just a matter of hours, I was able to lock in more than 5 figures on those puts*…

 

 

For me personally, I don’t think it’s too difficult to spot these patterns and take advantage of them.

I believe there will be plenty of momentum trading opportunities out there to take advantage of.

That’s why I put together this special momentum trading workshop.

I want to teach you my techniques to hunt down momentum stocks before they move, as well as some of my favorite setups.

Register for the training session here.

 

 

 

*Results presented are not typical and may vary from person to person. Please review our full disclaimer located at ragingbull.com/disclaimer.

Author: Jason Bond

Jason taught himself to trade while working as a full-time gym teacher; his trading profits grew eventually allowed him to free himself of over $250,000 in student loans!

Now a multimillionaire and a highly skilled trader and trading coach, Over 30,000 people credit Jason with teaching them how to trade and find profitable trades. Jason specializes in both swing trades and in selling options using spread trades, which balance the risk of selling options. Jason is Co-Founder of RagingBull.com and the RagingBull.com Foundation which donates trading profits to charity. So far the foundation donated over $600,000 to charity.

The market is getting dicey at these levels, and some traders are placing some wild bets.

By wild, I mean the chances of them winning are so low…

That only a “sucker” would take it.

This week, I’ll be on the hunt for some “sucker bets” to take advantage of, as well as keeping an eye on some low-odds bets I saw last week.

Today, I want to show you some of the wild bets that came across my scanner and how I may look to play them.

 

Sucker Bets To Keep On The Radar

 

When it comes to the “sucker bet scanner”, it helps with generating trade ideas.

You see, there are a lot that come across the scanner every trading day… and if you’re able to spot the ones with low odds, then it’s possible to set yourself up for success.

Let me show you what I’m talking about here.

Check out some of the bets that came across the radar on Friday.

 

 

If you look above, you’ll notice a slew of bets in Tesla (TSLA) and Carvana (CVNA).

If you notice in the orange highlight next to the options activity, this show X% chance OTM.

This lets me know the odds of that trade expiring out of the money (OTM).

If you know options, you’ll know that “% Chance OTM” indicates the odds that specific trade will expire worthless.

So if there is a trade that shows 80% chance OTM, that means the trader who bought that specific options contract has just a 20% chance of making money…

On the other hand, whoever sold to open those options, would have an 80% chance of winning.

Sounds simple to me.

 

How can this information be used?

 

Let’s say I’m bearish on TSLA and don’t think it will rally again next week.

Well, someone purchased the $1,720 calls expiring on July 17… when the stock was trading at $1,491.

That gives me an idea because those options had an 84.57% chance of expiring worthless.

Instead of buying puts on TSLA, I can look to sell calls.

However, selling calls outright can be dangerous, especially on a stock like TSLA.

So an alternative here would be to sell a call spread.

Basically, I could look to sell the $1,720 calls and simultaneously purchase further out of the money calls.

That way, on the off chance that TSLA makes a massive move… I would be safe because my bet would be hedged.

Now, I don’t necessarily have to take that exact “sucker bet”. I can also look to sell deeper out of the money call spreads… it all really depends on the price action for me.

You’ll also notice a “sucker bet” in CVNA… but with such the odds of winning on either of those trades in the 70% area, I may not be too comfortable to take it…

But I may still keep it on the radar.

That’s the beauty of the “sucker bet scanner”. It signals me to potential trade ideas and stocks I may want to watch and use a risk-defined strategy to take advantage of them.

If you want to learn more about the strategy I use to stack the odds in my favor and how I gain off the low-odds bets out there, check out my latest eBook.

Inside, you’ll get a crash course on options trading, and you’ll learn my strategies through real-money case studies.

Grab your complimentary copy here.

 

Author: Jason Bond

Jason taught himself to trade while working as a full-time gym teacher; his trading profits grew eventually allowed him to free himself of over $250,000 in student loans!

Now a multimillionaire and a highly skilled trader and trading coach, Over 30,000 people credit Jason with teaching them how to trade and find profitable trades. Jason specializes in both swing trades and in selling options using spread trades, which balance the risk of selling options. Jason is Co-Founder of RagingBull.com and the RagingBull.com Foundation which donates trading profits to charity. So far the foundation donated over $600,000 to charity.

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