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Delta Airlines (DAL) vs Peloton (PTON)

 

We’re going to start off with a pretty easy one.

First, let’s go over what a TPS setup is.

TPS setups include three components:

  • Trend – Clear trend that we can identify with the naked eye
  • Pattern – A chart consolidation pattern where using the tops and bottoms of the candlesticks, when I draw trendlines, they form either a parallel or triangle-like shape
  • Squeeze – Signified by the red dots at the bottom of the screen, it indicates when the Bollinger Band indicator has moved inside the Keltner Channel indicator.

So now let’s look at the two charts, Peloton (PTON) and Delta (DAL).

This comparison uses the daily chart for each symbol.

 

PTON Daily Chart

 

DAL Daily Chart

 

Let’s start by discussing the trend.

Peloton is clearly in an uptrend. The stock is near all-time highs and keeps ratcheting up every chance it gets.

Delta, on the other hand, made a move off the bottom but is still in a pretty obvious downtrend.

For me, that qualifies Peloton and disqualifies Delta.

When you think about their stories, it also makes sense.

Delta is an airline in serious trouble from the Pandemic. No one knows how they’ll come out of this.

Peloton saw demand skyrocket with customers locked in their homes.

Right there, that tells me all I need to know. I don’t really need to go to the pattern or squeeze on Delta.

 

Sprouts Farmers Markets (SFM) vs LuluLemon (LULU)

 

Here’s a really interesting comparison that has absolutely nothing to do with the charts!

I know, I know…just wait.

First, take a look at the setups.

 

SFM 78-Minute Chart

 

LULU 78-Minute Chart

 

Let me say this….both of the setups are valid!

Both meet all three criteria for the TPS setups.

But, I would choose LULU over SFM for one simple reason – liquidity.

LULU’s options not only have weekly expirations, but they also trade way more frequently than SFM, who only has monthly options.

And since I’m an options trader, higher liquidity (trading volume) means I keep more money as opposed to the market maker.

It’s just that simple.

 

Restoration Hardware (RH) vs Dollar General (DG)

 

Here’s another great comparison.

And again…both of these trades meet all three criteria for the TPS setups.

So, take a look at the charts and see which one you would choose.

 

RH 195-Minute Chart

 

DG 195-Minute Chart

 

Ready for the reveal?

I would go with Restoration Hardware (RH) for two reasons.

First, as you can see from the chart, RH moves a lot more in price than DG. That means I’m more likely to get paid out whether I’m long calls or selling a put credit spread.

With any setup I have, I MUST have price movement. Otherwise, it won’t work.

Second, and this isn’t obvious from the charts, Restoration Hardware has a much higher short-float.

High short-floats give way to short-squeezes, which are powerful moves that send the stock higher on a buying frenzy.

While neither are particularly high (over 15%), Restoration Hardware has 9% of its shares sold short compared to 1% for Dollar General. That gives RH an extra boost potential if it moves higher.

 

Keep practicing

 

I know that some of these weren’t obvious from the charts. In fact, some of them had nothing to do with the charts at all!

You see, many new members to LottoX soon realize they can spot the setups pretty easily. It’s the little nuances that go along with it that separate good traders from great traders.

One way to get better is through practice.

And a great place to start is with my LottoX service.

Not only do you get live weekly training, but I lay out my trading plan for the day so you can see which stocks I’m looking at and why.

When I’m ready to pull the trigger, you get access to my live trading feed to see how I enter and exit trades.

So, what are you waiting for?

Click here to learn more about LottoX.

Author: Nathan Bear

Although Nathan Bear has made options trades that resulted in over 1,000% profit, he’s “only made a few” he says wryly! Nathan is one of the best options traders there is. Period. His unique approach incorporating his adaptive 3-step “TPS” trading strategy, has so far brought Nate well over $2 million in realized trading profits.

Nate is a down to earth trader who now imparts his simple trading methods and relaxed approach to his trading subscribers to help give them the keys to trading success.

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6 Comments

  1. Nathan, i am a very new person to your service. I work only on my I Phone and i get lost in butterflies, short sales, credit spread and all the rest. The two page info you put out a couple days ago for Lotto X had lots of expensive calls. I consider anything over 800-1000 dollars expensive. Please help me get tye mist from your service.

    1. Hi, thanks for reaching out. I am more than happy to help you with where to locate Nathan’s training material. Butterflies, short sales. credit spreads, and more are all cover in his training materials. You can find access to these on your Ragingbull dashboard, which you can access from your iphone. This is going to be on the left hand side of your dashboard where it reads the name of your service, it will drop down to many training materials. Hope this is helpful, if not please contact us at support@ragingbull.com.

  2. Nate!!
    Bring back your LottoX trial run!!

    It’s the only way the little guys, like me can start. I’ve been trying for months to save up for the regular membership, but during these crazy times I usually have to use my profits to grease the wheels in real life.

    If not, I will keep working towards the membership and listening to you.

    I remember when you first launched this baby, and now seeing your success is bittersweet knowing I ALMOST had a chance to trading with you then.

    Thanks for all your effort and time.

  3. Thanks Nate – I like this lesson and the charts and the explanations, simple and very helpful for a newer options trader.

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