This week was painful chop and we weren't expecting friday to be different. MDB was on my radar as it is notorious for have a delayed ER reaction and a decent short interest to push it further then folks expect. Our pre-market thoughts reflected that
History doesn't always repeat but it often rhymes. Back in December, (green highlight) MDB poped post ER and faded to retest EOD, following day it never looked back before putting a 20% move over 2 weeks. If this pattern were to repeat, we should be expecting a pop at open then fade, to continue following day (in our case following week as it's friday)
Key in these plays is to buy at open, it is super risky as it can easily fade so you size your position at risk (i.e. willing to loose all). The pop and fade could also be quick so be ready with your sell orders. Here's what happened, it all happened within first 15 min of market open.
From there It quickly rushed to 314ish and stalled, I added a few 320c and later 315c weekly lotos but didn't expect it to do much until Monday. I was waiting for it to settles so I can add more next week's position and added JUN 11 330c, I was basically rolling my profits from open into a more confident position (i.e. it has proven to me that it has it in it to make a move here so likely there will be a follow thru.
Towards EOD (3pm EST) as I was contemplating adding more next week's position I noticed a spiked volume and it dawned on me that it might start the follow thru here and not wait till Monday.
Given it's the last hour of trading, it is super risky to play weeklies as within an hour it's gone. However, I had profits from the open and given that there's only 1hr left premiums were super low so the risk / reward was there.
MDB was around 299 when I added 300c (3:05pm) and shortly after 305c (3:09), I was thinking it might try for 310ish but didn't expect it to print new high. Within less then 20 min it did. Turned out to be a blockbuster play.
within 20 min, it exploded to new highs and reached 318, it's important to take profits quickly here as you have about 40 min till market closes
I was later able to close the other half of the 307.5c I had from open as well as the 315c I had. The 320c expired worthless
IMPORTANT TO UNDERSTAND THIS DOESN'T HAPPEN A LOT. But when it does, it's very rewarding. That's why you have to manage your risk especially on same day expiration plays. For example, the AVGO, LULU and SHOP lotos were all a bust.
Always remember that past performance doesn't guarantee future outcome and there has been Fridays where all these lotos expired worthless, so never trade more then you can afford to loose as losses stack up quickly
Trade safely...
Random Trader