Trade Potential 10/9/20 - NAVI, W, RKT, GRWG, JKS, LOW, TA & Game Planning GME
NAVI - Breakout potential. Target into the 12-14 range if can build over 9.50 using 9 as risk guide to start.
W - Chart update. Target still 350+ here. Upgraded after hours yesterday. Needs to clear 318ish for next leg up.
RKT - We started back into this last week, but its acting ready to retest key daily levels into the 25-30 range.
GRWG - Needs follow through over Wed/Thur highs to get next leg up. 17.50 as risk guide for next wave. Target 20+
JKS - I'm sitting on a strangle right now. If TAN loses daily chart uptrend, shorting solars will be a focus. Thus I'll add puts on JKS if it loses Thursday's low. First downside target is 40, then we'll see how it acts there. BUT if it reclaims 56, I will add calls as it will look to squeeze out everyone thinking guaranteed short. A great example of: TRADE WHAT IT GIVES US.
LOW - Very nice daily chart breakout potential. Risk guide 168ish, Target 180+
TA - Cup & handle bullish breakout attempt. Based on the range, the target could be 35-40. Lower volume, so don't go crazy buying the ask. You'll move the price too much yourself and then wonder why the trade didn't work for you. Accumulate dips if others helps support the bid. If trading options, use further out expirations (aka 3/19/21, 25-30-35 strikes). Spread your money around so its not tied to one strike if liquidity dries up. Never go all in on one stocks options. Good way to end up with nothing. This is a numbers game. You'll hit a few 500% winners and also have some 100% losers. It's kind of like dating. You don't know what you have until you've gone out a few times. Give it time to work, but cut it off if you aren't feeling it. Add effort/focus to a winner and let it ride.
GME - It's the ticker for game planning. Learning to plan your trades on the fly on top of having a watchlist every day should be a priority if you want to be successful in the trading world long-term. I first started covering GME earlier this summer as the initial breakout started over 5. A link to the Twitter thread here which highlights building a swing trade plan on the fly. Yesterday, this was primarily a day-trade plan as the stock popped on news of a partnership with Microsoft. Let's face it, it was fluff. Many companies use Microsoft as a backend partner to help the office run efficiently. But when the short float is 90%+ because at this time last year the fund world thought GME was going bankrupt, they have to start covering if the price gets moving to A) lock in gains, B) not get margin called, C) not lose money if they were late to the short party.
Just knowing a short float is not enough. Check the ratio to see how many days it would take to cover the short position. In GME's case its 10 days to cover at recent volume levels. Meaning a massive squeeze was due if the stock price stuck higher on the news. That's where I built a real-time trade plan using the 5-minute chart for a breakout over 11.50 to squeeze into close.
For me using short-term options is how I trade this fast-moving, low float, high short-interest stocks. Based on how quickly the price moved initially, I knew if they could take out the intra-day 5-minute chart resistance level, they would get it to squeeze for us. Thus, I jumped into 12.50 calls that expire 10/9 and quickly was rewarded with 100%+ gain that I reminded you to sell whatever position you took along the way.
I very rarely will suggest expirations/strikes on Twitter real-time because I don't need to be liable for someone who doesn't know what they are doing to end up with nothing. Thus, trade plan what you are comfortable with. Besides, if you follow people on Twitter just to piggyback them, you are doing FinTwit wrong. Use Twitter to help confirm your thesis or be a contrarian indicator. Most traders who post trade ideas on Twitter want you to learn the theory, so you can make money for yourself long-term. Or they use it as a personal blog to review their own trade plans. Blindly buying someone else's trade idea may work a few times, but it won't last forever. Learn to build your own trade process.
Give a man a fish, feed him for a day. Teach a man to fish, feed him for life.
If you aren't comfortable with options, then just trade the stock. The options only move because the stock is moving. If you are comfortable with options, pick the closest expiration you are comfortable with to make the most percentage gain. But don't just buy on news alone, wait for it to confirm its going to run as the 5-minute chart will confirm for us; in this case it was the 11.50 spot discussed above. Know the news, trade the action.
I hope this helps understand the GME trade better and realize that trading is more than just buying a ticker or option. If you want to make money again and again, learn to build a trade plan. Here is another example from CRSP earlier this week. TraderIsaac was spot on with building his swing trade plan for the downtrend breakout as discussed here.
CRSP - Now needs to clear 100 for next leg up. Set your alerts.
Hell, you might think only buying breakouts is a bad plan long-term. That's good. You're thinking for yourself. So build a plan that you will stick to. If its using other indicators, buying dips, trading LEAPS only, shorting high flyers; whatever you want to trade. Just build a plan and stick to it. Readjust the plan if you get stopped out or take profits. Or find a new ticker.
Feel free to shoot me questions on Twitter!