3/20/2021 Markets down slightly this week. Sold STNE for a loss, went long on ORCL on Friday’s close. Bought deep OTM puts on XLE to hedge MRO position.

Welcome back everyone. Despite some larger than usual price swings this week, the indexes ended down just under 1%. Risk reward favors more downside next week, but I bought a large position in ORCL because it’s offering a good setup.

I’m testing my limits for risk appetite, and was comfortable taking a larger than originally planned position. It seems I might finally be used to losing 1% of my account. This wasn’t the case a few weeks ago due to the larger dollar amount 1% of my account represents.

I also got out of STNE for a small loss because despite it being the best setup I’ve seen in a year, it continued downwards when I was expecting a sharp rally.

Lastly, I bought a handful of deep out of the money puts on XLE to hedge my MRO position. I still need to hold until 3/25 for half the position to qualify for long term gains, and until 3/30 for the other half.

QQQ daily chart below:

STNE daily chart below. I took a small loss (.2% of account) 2 trading days after entering because it followed one of the scenarios where I would sell. The chart still looks good for a longer term swing trade (1-2 months), so I might get back in if we close at or above 70.

ORCL daily chart below. I’ve thought of 4 scenarios for the stock price and the appropriate action I would take if the scenario occurred. Most scenarios result in holding the stock either until the profit exit or getting stopped out. I plan to hold the trade for 4-9 weeks if the trade is working out.

Lastly, I bought 10 XLE 40 strike puts expiring April 16th for about .25 per contract or $250 total. Although I think the large majority of the pullback in energy stocks is over (and would be buying here), there’s a small chance we continue sharply lower, in which case I want to hedge my MRO position.

I chose XLE puts instead of MRO puts because they are far more liquid. I also bought double the puts because MRO has been roughly twice as volatile as XLE.

MRO daily chart below. Yes I would be buying here if I didn’t have a massive long position already. Maybe I’ll swing trade XLE.

Earlier this week, I had plans to buy into 6 or 7 positions, but decided not to because we were going to have a large gap down on the indexes. I still have two long orders for REGI, but the others (WMG, WB, PLRD, BAP) have been cancelled.

I also got a very strong urge to buy or sell puts on PTON on market close Friday, but held off on my urges. The risk reward is still fine here, but if I’m targeting only 120 for a profit exit, we are a bit too high now. Now might be a good time to sell slightly out of the money (105 strike) weekly puts.

I hope you enjoyed the blog post, and see you next week!

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