Thread by @OpenOutcrier

$BA Boeing Six-Figure Friday Trade Opportunity

FULL DISCLOSURE: I DID NOT MAKE SIX FIGURES ON THIS TRADE (and I'll fully explain how I butchered this massive opportunity)

Another Monster Trade Opportunity on an Expiration Friday.

BOEING INTERNAL EMAILS SHOW THEY KNOWINGLY MISLED FAA ON 737 MAX

When news breaks we trade options to take advantage of their immense leverage power to maximize profits.

Never is this more apparent than on Expiration Fridays when we can purchase cheap options, and ride them into the money where their value can explode exponentially.

This stock move was a bit different from the Alibaba $BABA Trade I outlined a couple of weeks ago but it is actually more instructive as it is how news trades move more often.

Spike. Bounce. Then its decision time. Will it float back up? Or break to new lows?

Recognize. React. Risk Management.

If you are fast you can do well scalping and locking in before/into the bounce. If you miss the Spike, its almost better to wait for the bounce, then put your position on when nearing/breaking to new lows.

Since we never know which trades will continue and which trades will reverse after the bounce I recommend scaling out of your position. For me 2/3 into the spike and 1/3 after is what I try for.

I tried to buy three different strikes, 360 357.5 and 355 puts and missed on all 3 of my bids (I tried to hit offers and they disappeared/no fills).

So I chased the 357.5 puts, paying $0.52 for 100 lot (more than my original bid in the 360 puts).

Stock bounced and I attempted to wait it out, but the market in the puts fell all the way down to $.30 and I dumped my position.

5 minutes later I broke my keyboard. A childish move that I'm not proud of, I wish I had control of my emotions all the time, but I'm a work in progress. So I went for some coffee to cool off re-center.

I was managing my risk and trading what I saw, and I saw puts being sold and stock rebounding. I was concerned I didn't understand the headline properly.

One thing I neglected to realize/remember is it sometimes takes a little longer for the bigger Dow stocks to get moving, but once they do they can really pick up steam on a momentum shift.

Long 100 Puts for $0.52 means:
I risked $5200 for 10,000 shares of $BA short exposure (or $3.65M in short stock)
I lost ~$2000 whereas the max gain on the trade was $137,500
I'll take that risk/reward as much as i can get it.

$BA Oct18 357.5 Put Chart

Another learning experience logged in the books.

Now off to Best Buy for a new keyboard.

Couple of additional thoughts. I basically missed the trade twice due to my little temper tantrum. It kept me from re-entering the trade on the continuation play.

It doesn't matter that we all know better we still need to overcome our demons daily.

No one ever holds their whole trade to max profit. I am cherry-picking numbers to display the huge profit potential that options provide.

If I was filled on what I attempted to buy, (100 contracts on 3 different strikes). I would have been happy making $10k-$30k.

The max potential of those three positions would have been about $400k.

You can live very well inside these moves when seeing things clearly.