dani face dani quote

Potential Double Profit With Bearish Sentiment

Hey 5-Star Trader,

“Tuesday Trade” Journal: One of the most important concepts in trading is to review your work, and learn from the good and the bad. Identifying what is working is critical — to do more of it. So, to lead by example, each Tuesday, you’ll get a trade from my trading journal, in which I explain my thought process from start to finish. Trading is all about finding something that works, and applying it over and over again. That’s how you find trading success. So study up on this “Tuesday Trade” and let’s get to work.

For this week’s example, I want to talk about trading the Nasdaq (QQQ).

As I’ve touched on before, the seasonality of May is typically very weak. In the last five years, the market has been flat to down the first week of May. This, in addition to the fact that I was trading the “FAANGover” after major Facebook, Amazon, Apple, Netflix, and Alphabet (formerly known as Google) (FAANG) reports led me to look for a bearish trade. 

Since I anticipated the whole market to experience some kind of pullback, instead of choosing a specific ticker I decided to put on a bearish fly on the QQQ. My charts were showing me a consolidating squeeze, volume going negative, and downside support targets (pictured below).

I entered with three contracts targeting $330 (BUY +3 BUTTERFLY QQQ 100 (Weeklys) 7 MAY 21 340/330/320 PUT @1.96 limit order (LMT).

Because this was a short-dated trade, I managed my risk by making this a small-sized trade.

In four days, the QQQ pulled back perfectly and hit my target. I was able to close out for a little more than double in the green (SELL -3 BUTTERFLY QQQ 100 (Weeklys) 7 MAY 21 340/330/320 PUT @4.21 LMT). Below is a screenshot of my options chain.

The notion “Sell in May and go away” certainly seems to ring true when it comes to market behavior, but this time we were able to use market sentiment in our favor!

For alerts to trades like this, join my Stacked Profits Mastery program. I send out actionable, real-time entries and exits on the trades I’m taking.

Up Next...

Assigned… What Now?

Hey 5-Star Trader, One of the reasons I fell in love with options was because, unlike stocks, you can use leverage and risk less money for a larger payout. However, when buying options there is always a chance you will be assigned. While this rarely happens to me, I was recently assigned Campbell’s Soup (CPB) … Read more

Read More

Stock Split For NVDA

Hey 5-Star Trader, “Tuesday Trade” Journal: One of the most important concepts in trading is to review your work, and learn from the good and the bad. Identifying what is working is critical — to do more of it. So, to lead by example, each Tuesday, you’ll get a trade from my trading journal, in … Read more

Read More

Why You Should Target This ‘Danger’ Sector…

Hey 5-Star Trader, Technology is a huge part of our everyday lives and has perhaps become even more important to us this last year when many people had to make changes due to Covid-19. More people are working from home, playing video games, and shopping online than perhaps ever before. But how are these exchanges … Read more

Read More

Subscribe Today!

Want to walk the path to trading success together? Join Danielle’s “Five Star Trader” E-Letter for market insights, tips, tricks, and special bonuses.

Sign Up Now

Free Downloads

Squeeze Checklist

When you find a squeeze, check these boxes to see if you’re looking at a higher probability bet.

Risk Checklist

Before we can make money we must define the rules that define our risk parameters.

High Probability Plays in a Directional Market

Download Danielle's free eBook

10 Steps to Becoming a Successful Trader

Commit to becoming a successful Trader

Strategy Selection Risk Gauge

Danielle focuses on creating a constant stream of income through the selection of trend-following, directional plays.

Upcoming Appearances

Check Back for Upcoming Dates

all-as-seen-on-logos