MBI Play

Yesterday, MBI was halted within 5 mins after the market opened - pending news. When it resumes trading, the stock spike upwards. Since it is a weak stock and the news should not translate to such a huge jump (almost $8 spike), waited for the stock to reverse. I drew the Fibonacci levels. I enter on the 5th candle (5-min charts). Bought Dec $35 Put @$2.40 (when the stock was $35.95).

I waited till just before 2:30 pm (EST). At that point, the RSI and stochastics were very low. The stock consolidate somewhat. Typically, just after 2:30 pm, stocks might just start to reverse. Made a decision to lock-in my profit and sold my Puts for $3.20 (33.3% profit over a few hours) . As it turn out, the stock went down slightly further before it made a short rally till the end of day.

For those who might think that making $80 for one option contract is peanuts and is not worth the while, think again. For beginners, I always encourage playing small and earning peanuts. When you have consistently made profits (could be peanuts) with your trades, you can slowly increase the number of contracts.

For example, 10 contracts of MBI Put options (as above) would cost you $2,400 of capital but it gives you $800 profits for a few hours work. So those who are new, my advice:

Think Big, Start Small and slowly but surely Play Big.

If you start playing big when you are not good in your trades yet, you will also lose big.

So, how many contracts did I play yesterday? That's for me to know, and for you to find out (if you even bother ;)

- PersianCat04 (Millionaire-in-progress)