A successful setup in Chewy

A Tuesday Trade Edition: One of the most important concepts in trading is to review your work, and learn from the good and the bad. It’s critical to identify what’s working — to do more of it. Each week, you’ll get a trade from my trading journal, in which I explain my whole 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.

I’m back talking about Chewy (CHWY)…

The exact trade I’m about to show you, I gave to you in our free Options Videos, AND my last appearance on CNBC highlighted CHWY and its potential. I’ve linked both those videos a little farther down in the letter for you.

Now today I took the rest of those profits off on this trade…

Here’s where I gave you the setup in the free Nightly Options Video.

Here’s where I talked about CHWY on CNBC.

Now To The Trade Setup

We’ve been trading CHWY over the last few weeks for a variety of reasons:

  1. It’s a five star setup.
  2. We had positive volume on the Turbo VZO Indicator.
  3. We had high short interest.

And what’s really important to note with the setups I pick in my five star trading. is that I have a confluence of setups. I don’t just have one squeeze, one signal, or high short interest. I have a confluence of a five star pattern, positive volume, high short interest, and my TrendStrength Candles giving me a signal which is what makes it all come together to make a great options trade.

How It Played Out

With this one, it required patience.

This didn’t just come through overnight — but good things are worth waiting for. This had been trading sideways for weeks. But I alerted my mastery members that I was buying stock on this  around $45 last week, and alerted them to the options trade about two weeks ago. 

Basically this was just all a waiting game from the start.

When you have the setup and you know that it’s there, you just have to wait and wait for it to come through. However I did know it was coming through before it officially took off. 

How?

I knew it was coming through on Friday because last Friday the ticker traded higher right up into a key area of resistance — this is a cash money zone. Now we don’t ever know if these short interest tickers are going to break the cash money zone… but this one did. Plus it broke the cash money zone on high volume, which is how I knew it was going to gap up the next day.

So I took some of my profits off early because it was already a pretty good move. But then I waited till yesterday to take the rest of them off.

The Profits

Essentially I paid $6.15 on entry. Then the first time I scaled out, it was at about $8.50. That’s a nice, cosnervative profit. But then the second time, yesterday, I took it off for about $13. That’s just around a double. That’s a more aggressive profit, but the setup was still there and strong, so I trusted the process. Patience pays off as long as you feel confident in your setup from the get-go.

This helped me have over a $4k day yesterday.

And as always, when I mention high short interest… this is the setup I taught step-by-step in my Short Interest Secrets course not too long ago.

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