Thread by @StratNate20

1/ A follow up to Friday's $QQQ trade for my #TheStrat friends. Here's a thread on how to ninja trade options on Fridays. This is probably the "advanced" master-slayer category, but a teaching moment nonetheless that was incredibly fun @RobInTheBlack

https://twitter.com/StratNate20/status/1484591838019428352

2/ To start, the importantce of outside bars cannot be stressed enough. This is where broadening formations are made. Trading during them is similar to trading inside bars-very difficult and requires expansion and hyper-awareness

3/ That said, we know going into Friday our first daily downside target for $QQQ is 353.13 - the outside day from October 6. How we get there is the question.

4/ On friday we see massive selling-- aka continued TimeFrameContinuity - where $NFLX leads the charge lower. After 3 hours we finally get our first 60-min signal. An inside 60 (yellow bar) on the $QQQ

5/ The first 5-minute bar after that inside 60 goes outside 5 after the 11:30 (cst) flip and tries to take the 60 down (blue bar). We know outside bars need expansion right away, or they become fractal broadening formations

6/ Sure enough - for the next 35 minutes we failed the intitial outside 5 expansion / inside 60 down. $QQQ

7/ But we know at this point that the outside 5 is a mini broadening formation. So, IF we go back to the top of the BF (358.08) and fail, we could then re-confirm the inside 60 and down. Setting up a very high risk-reward setup

8/ So, we flip to the 1min chart and look for a sell signal near 358.08 and we got just that. $QQQ spiked to 358.36, and went 2 down on the 1min chart.

9/ Here is where ninja trading, the not-often-talked about aspect of #Thestrat pays huge dividends. $QQQ 357 puts dropped from about 1.55 to 1.00 in 5 minutes leading up to that. Ready to pull to trigger we waited for the spike and hit this quickly -- buying 10 puts for 1.07 avg.

10/ Reminder that this was HOUSE money. We were up $3,100 on the day and were willing to take a 50% max loss on such great executing / highrisk-reward trade. Risk management from this point on would have been a reversal on the 60, via 5-min charts.

11/ Now, we know that if this trade works, we will reconfirm the initial inside 60 down (FTFC down), and then go back down to that ORIGINAL 5 min bar from 11:35. This is our first sell target-- and we sold 30% for 2.36 per contract once we hit that target.

12/ After selling 3 of the 10 contracts we recaptured 700 of the initial 1,070 trade. From here we are trading at 355 and I really dont care where the $QQQ's close. What will force me to close this position is a 60minute signal (1/2, 2/2, etc.)

13/ At this point I have taken approximately .10 cents of underlying risk. And I can sit and watch the 15min chart for hints of reversal and not see option decay or loss in profit. Still above breakeven the whole time.

14/ Finally, the last signal of the day that took us to our initial target of 353.15 was in the inside 5 and down off of YET ANOTHER outside 5 at the bottom of a broadening formation. We hit our target, and sold at the offer the remaining 7 contracts -- 4.05.

15/ not all trades go this perfectly. But, knowing the market conditions where this could occur is the point. IF we fail the outside bar,and IF we reconfirm 60dn, we THEN can get back into FTFC and head to our target of 353. This, compounded with optimizing risk/reward,is the key

16/ Hopefully this helps some Stratters think about their execution and precision/risk management. It took me 10 years to figure this out, but man, this one may have been the most fun! #TheStrat @RobInTheBlack