11/1/2020 Selling accelerates this week. We might get a small bounce upwards, but I think we will continue lower in the next few weeks. Took a large loss on DKNG, Boeing is starting to look attractive again.

bigfry Category1 November 1, 2020 1 Minute

Hi everyone, welcome back! Last week I mentioned that I wasn’t sure where the indexes would go from here, but guessed that we would move lower. It turns out we moved quite a bit lower, which was unexpected.

I took a large loss on DKNG for 2% of my total account value (sold on Friday). I am now out of all my short term positions because my trading strategy works poorly when volatility is high (I get stopped out too often).

SPY weekly chart below. The 320 level might hold this time, but then fail the next time we test it.

DKNG daily chart below. I took a 2% loss on my account on Friday.

Boeing is moving back to a price level where I am considering buying again for the long term (3+ years). I want to buy in the 90 to 120 range and sell near the low to mid 200s (like my trade in March).

Have a great week!

Published by bigfry

Hi, I’m Nathan. I majored in Finance and minored in Piano Performance at Boston University (graduated in 2020). Outside of trading/investing, I enjoy programming, teaching and playing piano, teaching and playing Go, fishing, and watching anime. I also started my own Boba company while at BU. I'm currently teaching Go full time, which has been the best job I could ever hope for. I'm also currently attending the App Academy bootcamp which started in January 2023. View all posts by bigfry

Published November 1, 2020

2 thoughts on “11/1/2020 Selling accelerates this week. We might get a small bounce upwards, but I think we will continue lower in the next few weeks. Took a large loss on DKNG, Boeing is starting to look attractive again.”

vamsu (@vamsu) says:

November 1, 2020 at 4:48 PM

Curious, why you decided to not stick to your wheel strategy on DKNG? I understand you risked too much, but wouldn’t be better to sell covered calls. Just trying to understand if you are very bearish, not trying to suggest anything else otherwise.

Something else I learnt that may help you in future. When we are at a loss and willing to double the size to the losing trade then selling a straddle ATM in the front month is very beneficial to cut loses. At least a useful option when the loses are big, may be not worth on every trade as we might end up not trading the plan.

Example
Worst case – DKNG 35 strike Nov 20 straddle is 7.25, so the breakeven is 27.75 if you get assigned again. So your average stock price will be (40.5+27.75)/2 = 34.125. From then you keep selling covered calls for a break even.

Best case – Stock goes above 42.25 (35+7.25) and you get keep the the straddle premium and give away the stock you own.

If the stock is somewhere in-between, you could break even or cut the loss. I am sure you might know this already, but sharing in case if you don’t know it already.

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1. bigfry says:
  
  November 1, 2020 at 6:13 PM
  
  Thanks for the example – it is always helpful to have different trading ideas! In this particular scenario, the stock broke down far quicker than I planned for so it no longer qualifies for my “wheel strategy.” Earnings are also coming up soon, and I would rather not have extra risk from holding long, even if I sold calls. For these reasons, I am out of the trade, but may consider entering again after earnings.
  
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