Yelp And Facebook Stock And Options Position Trading

Yelp and Facebook fit our stock and options trading strategies very well.  And since we have been trading Facebook, I also want to add Yelp to the stock position trades portfolio.

So, in this video I want to continue talking about our renko base trade setups – but instead of discussing euro currency and emini russell futures day trading, we are going to focus on using these setups for position trading entries.

As I begin, I want you to first note how we use the same type of chart reads and setups, regardless of whether it is a day trade or a position trade – but there are some specific differences:

  • Position trading will use a combination chart like the renko chart or a faster bar chart, for trading in the direction of the 60 minute position chart
  • Trade setups that don’t synch with that direction may be used for exits – we aren’t always in a position
  • And they may be used for taking profits and/or the timing for options trades

Yelp Stock And Options Position Trading

Facebook Position Trading Update

You are looking at the 60 minute facebook position trading chart – the left side swing is where we ended on our 1/8 update, and the right side is what happened on 1/9.

You will remember that we had a number of trade scenarios based on going to a price momentum divergence high or going straight down from the last bar with falling momentum.

1/9 Facebook Trading

Facebook Stock And Options Trades

You can see that we went to the pmd high first, and then the swing reversed – here are the trades that were done:

  • Sell 1/17 60c .93
  • Sell 1/10 55c close 3.20
  • Buy 57.5p 1/17 exp .90
  • Exit long stock 57.44
    • 60 min went into sell mode – look to the renko chart for a synch setup
    • Long 57.5p .93 short X short 60c .93 – uncovered after 55c close
    • Becomes synthetic options short after stock exit
      • Short participation without a trade setup from the transition of a covered options position to an uncovered position
      • And this is a very good benefit of trading a stocks and options combination method – where you trade the stock directionally and then trade the options counter direction, like what was just done

Now look at the Facebook renko trading chart – you can see the renko price envelope reverse, but can you see any sell setup to trade the 60 minute reverse?

There is no setup – but again remember that we are short after the long stock was exited.

1/10 Facebook Trading

You can see the last 2 renko bricks are up, but the chart remains in sell still – however, this movement does have the 60 minute chart setting up to reverse back into buy

  • What would happen to the synthetic options short if there was a facebook buy at 58.00?
  • Do the math and we will discuss this further on our next facebook position trading update

Yelp Position Trading Upate

This will be the first time that I have mentioned YELP, but I have been position trading Facebook, Yelp, and Twitter with a portfolio approach, similar to what I have been discussing with the ETFs.

There are some big differences between these 2 groups that make a difference for trading:

  • The 3 stocks tend to have more movement and volatility, which are especially helpful for our short options trading strategies
  • On the other hand, the ETFs have less volatility, which could be expected from a broader index compared to individual stocks
    • But that has been a problem for options selling, because you can only get relatively small credits
    • You can do options collars with good timing, but I only want to do those against open profitable trades
      • With low volatility, the option buys are relatively cheap protection

Stock is long from 1/6 69.22 | 70.30

Yelp Stock And Options Trades

1/9 Yelp Trading

  • Is yellow dot1 a base renko trade setup – why wasn’t the trade taken?
    • Yes, it is base trade setup – take the trade if day trading the underlying
    • Look at 60 minute position chart – would be a short against buy position
    • What is the open options trade that is long stock protection
      • Long 69.22
      • Sell 1/17 82.5c 1.75 buy 1/17 80p 2.10
        • Would have preferred 83c sell and 79.5p buy – but strikes not available
  • 60 min pmd high sell synthetic short protection – it is a covered trade

1/10 Yelp Trading

  • Is the yellow circle a situation to buy the price envelope reverse?
    • Yes, especially if exited short at yellow dot1 – and look at the renko brick pattern that synchs with the 60 minute support double bottom
      • Price momentum divergence low – price envelope reverse
      • Renko brick wedge and focus line breakout
  • Buy yelp as described – the trade was done at 78.75
  • Additionally, this new buy would be a hedged trade with the synthetic short
    • It would also keep from ‘wasting’ then losing on the synthetic short with a yelp price resumption move up
      • Yelp synthetic position graph
      • Position math = 90.00 min gain and 340.00 max gain
      • Min gain 80 and below – max gain caps at 82.50
      • Is yellow dot2 a base renko trade setup?
        • Yes, and the trade was done as an addon at 80.28

That ends this stocks and options position trading video.  The Yelp position is long Yelp stock against the options synthetic short, with uncapped upside price participation from the Yelp addon trade.

The Facebook position is short from the options synthetic after exiting the long stock, regardless that we never had a stock short sell trade setup.