We often talk about how the markets are controlled by machines.
Josh Brown has a post on our site this morning noting the 3pm activity in the markets is for non-human trading only. At PSW, we love the TradeBot, who we affectionately call “Mr. Stick” as he shows up a lot more often than Santa Clause to shower us with presents in the form of last minute market moves that are an option trader’s dream.
Even non-option players can make out great following the late-day action. JRW leads our day traders with plays on TNA, which is a 3x Ultra-Long on the Russell and we often catch 2 and 3% moves on that ETF in the afternoons. Just yesterday, JRW was out and I had to fill in but, since we know the game is rigged and we know how to play along, I was able to call the trade for Members at 2:13 saying:
Day Traders: I would say possible entry point for TNA is going to be $40.30. Like a futures contract, you can play TNA over the $40.70 line with a nickel stop and then reload at $40.30 with a dime stop so risking .15 in catching one of the two moves up. Of course, I’d rather man up and sell the $38 puts for $1.80 agains the the $38/40 bull call spread for $2.20 and be in the $2 spread for net .40 but that’s just me…
I had a couple of follow up comments but most of us were happy to take $1 on at least 1/2 of and run as we were rejected at $42 just 40 minutes later. The second half ran all the way up to a $1.90 gain into the close. That’s how you use the stick to make a nice, quick 2.5%+ on a stock trade in a day. Of course the option play did a little better with the $38 puts dropping to $1.60 and the $38/40 bull call spread still at $2.20 for a net .60 off the net .40 entry so a nice, quick 50% there but we have no reason to quit that trade as it returns the full $2 (400% profit) if TNA simply finishes above $40 next Friday. Unlike the stock trade, we don’t really fear the quick reversal as much as we can roll out of the position or just exit with a small loss.
At 3:53 we took our…
