I’ve been running hot on my Bullseye Trades of the week over the last month, nailing 4 amazing trading opportunities in a Row.
Bullseye trades is a service where I present my best trading idea for the week every Monday morning after some heavy research over the previous week and weekend.
I called a $27 move in ROKU in 2 days. A $1.80 move in FIZZ, a stock that doesn’t move much in 4 days. I traded a $30 move in AFRM in 3 days, representing a 25% move in the stock, which went on to go a further 15% without me. And, I called a $27 move in ETSY over a month, which stopped me out of the trade, then ran exactly as I had expected, moving over 10% from my desired entry.
I called a $27 move in ROKU in 2 days. Here is the Bullseye trade Recap!
Jeff Bishop on October 22, 2021 at 12:34 PM
Unfortunately, I was never able to get my fill in ROKU before the bulls took the stock up to $350 from $325!
And even though ROKU is back towards the 200 hourly moving average, I don’t want to buy right now.
The lesson you can take away from this missed trade?
Missing a trade is just the way of the trader… No trader can get them all!
ROKU Monday Email Recap
Roku, Inc (ROKU) – Hourly Chart
ROKU has been a very hard stock to trade to the long-side lately as it has dropped from a high in the $ 480’s in late July to a new low of $300 in early October. If you follow my trading, you will know that I love to buy huge previous winners (like ROKU) after they dip, the question is always “when do you step in”?
I like to target both the weekly and daily charts for clues on when that is a good idea. Right now, we are seeing ROKU begin to trade above the daily support levels I look at and the weekly chart is starting to emerge from the 4-week base as well.
The Trade Plan:
My plan for the trade is as follows: I want to start a position buying calls on a dip in ROKU below $320 (I also might start a trade higher if ROKU trades above $333 first).
My stop on the trade is going to be if ROKU closes under $305. If that happens, I will take my loss and wait for it to once again set up above the hourly levels.
On the upside, I think ROKU can reach near $350 which is where I would take all or most of my profits.
The Trade Details:
- Higher-risk “spicy” idea: ROKU Oct 29 2021 $335 Call near $6
- More conservative idea: ROKU Nov 5 2021 $315 Call near $18
- Another lower-risk option on this idea that I like is to sell ROKU Oct 29 2021 $305/300 put credit spread around $1.45. I plan to set this trade up in Total Alpha this week.
I Called $1.80 move in FIZZ, a stock that doesn’t move much in 4 days.
National Beverage Corp (FIZZ) Recap
And one stock that’s been sneaking higher all week is National Beverage Corp (FIZZ) and it was my Bullseye Pick of the Week on Monday!
As it’s slowly climbing higher without me, let’s take this time to reflect back on what I saw and what put this stock on my radar in the first place.
FIZZ has been climbing higher since August even with many stocks well off their highs.
But it’s considered a tricker trade because it is a lower-volume stock and therefore has less options that are available to trade.
For example, there are no weekly contracts on FIZZ which means I’m forced into looking at a longer-term play. For this trade, I’ll be eyeballing the November contracts that have about 40 days until expiration.
Important: Due to the lower volume, I’ll be trading a smaller size position and allow for higher levels of volatility than I normally would.
The Trade Plan:
I really like the recent “flagpole” we saw Sept 10th, which shot the stock up 12% in a single day. Since then, FIZZ has consolidated very nicely for an entire month in the low-$50 range and is finally breaking out of the $54 level which was resistance the whole time. I am looking for a slight pullback to the low $53 level, which is where I want to start a trade.
I plan to keep a pretty tight stop on this trade. If FIZZ closes under $51, I will stop out of my position and look for another opportunity to come back to it when it sets up again later. If I am right, then I hope to take profits if FIZZ pushes up near $60.
The Trade Details:
- FIZZ Nov 19 2021 $55 Call in $2.50-3.00 range
- Another lower-risk option on this idea that I like is to sell FIZZ Nov 19 2021 $50/45 put credit spread around $1.45. (I plan to set this trade up in Total Alpha this week.)
I traded a $30 move in AFRM in 3 days representing a 25% move in the stock, it even went another 15% without me.
Looking at the chart above, AFRM is trading higher from its lower support level near $108. At the time of writing, this stock is being squeezed between the 13 and 30 hourly moving averages with the 100 hourly above near $115, and the 200 hourly below near $105.
AFRM has been in break mode since announcing their deal with AMZN a few weeks ago. Pouring some fuel on the fire, they announced great earnings after that. I think the recent pullback is a great entry and I am looking to load up soon.
Considering my stop first, I plan to have a stop limit on the trade if AFRM closes under $107, which is below the recent low from 2 weeks ago. The stock did not hit that level last week even though the market was the roughest we have seen in a long time.
That is a very strong sign to me. When a stock doesn’t break lower when the market collapses, that is a great signal that buyers want to step in. We have seen an “inside week” and also 2 “inside days” for AFRM in the market turbulence, which are also very strong signals.
Also consider that we have the Christmas season coming up soon and I expect that many retailers will be adapting AFRM on their checkout pages.
I believe that this should provide a lot of support as we head into December.
On the upside, I plan to scale out of half of this trade near $130, which is the recent high. After that, I would either protect the remaining half at breakeven or shoot for $140+ if we see a surge past the all-time highs.
My Trade Plan Recap:
- My Target: I plan to scale out of half of this trade near $130, which is the recent high.
- I want to look to protect the remaining half at breakeven or shoot for $140+ if we see a surge past the all-time highs.
- My stop if we close under $107
My Trade Ideas:
- Higher-risk “spicy” idea: AFRM Oct 22 2021 120 Call near $8
- More conservative idea: AFRM Oct 22 2021 110 Call near $13
- Another lower-risk option on this idea that I like is to sell AFRM Oct 15 2021 $105/100 put credit spread around $1.65 . I plan to set this trade up in Total Alpha this week.
I called a $27 move in ETSY over a month, which stopped me out of the trade, then ran exactly as I had expected without me, moving over 10% from my desired entry. I did the right thing to stop out and take a loss. However, there was an opportunity to re-enter the trade when it made a higher low, leading to a move even bigger than I had originally expected.
ETSY – Bullseye Update Of The Week
Unfortunately, not all trades work out… and in some cases, worse than others.
I just hope that as a trader you stuck to the game plan and didn’t just continue to hold this trade.
Remember, there is a reason that I provide my stop level for every trade that I send out!
And this week, this was the case with Etsy Inc. (ETSY).
At this point in time, I am NOT in the position, and I exited the trade when my stop level was hit.
For your reference, here was my trading plan on Monday:
My Trade Plan:
- Long around these levels
- Target / Scale out near $230-$235 if the trade works.
- Stop with a closing price below $215
And when the price fell below my stop level, I exited this position and followed my trade plan.
What is sad to hear is that many traders just continue to hold the stock as the markets plummet.
This is not a good trading habit at all and needs to be fixed right away…
So, in this Bullseye Update, I want to share with you some lessons on taking losses.
Trading Lesson On Taking Losses:
Selling a position that is going against you is never fun, and especially when a pattern that is known to be bullish actually goes bearish. But if you are careful with your trading, you can actually help improve the amount you risk and make this less painful.
Well there are two ways to do this:
- Position size correctly for your risk tolerance
- Instead of entering immediately, wait for a pullback in order get a better entry price
Why wait for a pullback instead?
3 reasons to wait for a pullback:
- You lower your maximum loss on the trade!
- Increase the likelihood of a bounce occurring as bulls start to buy on the dip
- Increase the maximum profit on the trade if the stock moves back towards your initial target.
See, so why trade with FOMO when there are so many positives to being patient and waiting for the stock to work out?
I want to remind you of a few things that help me:
- Position trades with the correct size so you don’t “over react” to a stock dropping after the initial purchase.
- Give enough flexibility to buy additional stock on the way down. Don’t load up on the first trade!
- The goal is to live through the dip to still catch the bounce higher and not get shaken out.
- If a trade is considered to be a “big loss” it is important to step back and reflect on position sizing. No single trade should ever be considered a “big loss” to a trading account.
But even with these tips, I am not successful on every trade – it’s the nature of the business.