Spotlight Power Trader – Short HYG

Posted in: Trade Of The Week, Trading Article

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This is the week ending March 23 2018 and our custom made trading system, Spotlight Power Trader, has highlighted a trade in the  iBoxx High Yield Bond Fund ETF, symbol HYG.

The trade setup is a short and instead of selling the actual shares, we are going to use the versatility of Options trading and buy put options.

To do so, we will use the actual stock chart of HYG to help guide our Options trade that we will be placing.

 

Put Options Trade Details

  1. If HYG hits 84.79, then buy May 86 puts.  You could also buy June 86 puts for more time but I believe May would give us the time we need for this trade.  Either May or June would be fine.
  2. Place a stop at 86.26.  If HYG hits 86.26, close the position.
  3. If the price hits 84.40, we will move our stop to a break even position
  4. There are 4 targets and a trailing stop.  Take 20% off at each target and trail the remainder.  If you are trading a smaller position, you can take profits at T2.
  5. T1; 83.81 (T = target number)
  6. T2; 82.43
  7. T3; 80.98
  8. T4; 80.29

 

put options trading chart
Stock Chart Showing Setup For Options Trade

You want to make sure you keep on top of any updates to this trade.  Bookmark this page and make it a habit to visit daily to make sure you don’t miss out on any important developments.

 

Trade Of The Week Updates

Our trades of the week section is becoming popular with traders looking to find a consistent edge when they approach the markets.  It’s vital that any trade you are taking or tracking benefits from the updates that we make to each trade when needed.

There are some updates to some other Spotlight Trades of the Week.  They can be found on each trade’s post but here they are for your convenience.

  1. Hold USDCAD.  Big strength in the CAD but we stick to our trading system and let it guide our next steps.
  2. Hold EURAUD
  3. Our put position in T closed out today, hitting its stop for a loss.  Options should be closed recapturing the remaining premium left on the option.  This is why I prefer options with more time vs less time.
  4. USO missed its T2 by just .02, 2 ticks.  Aggressive traders can look to close out of 20% of their position if they don’t want to fight over 2 more ticks.  Patient traders can wait as this trade has a high percentage chance of hitting its target and then some.

 

 

missed target
USO is on the verge of hitting its T2, missing by just 2 ticks today

 

Update 4/12/18; Cancel this setup

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CoachTJ

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