Why did I buy $SHOP at open? the story of 50 bagger.
I'm watching about 20-30 different tickers at open to gauge the overall open while mainly focused on a few tickers that I'd be looking to play. To be honest, SHOP wasn't on my today's WL but it was one of the tickers I'm watching.
SHOP has been extremely frustrating as there was a massive breakout looming on it as shown on the daily / weekly chart
When the market opened, I noticed the thrust on SHOP against the 1550 pivot. 1550, 1580 were both major pivots that previously acted as significant resistance/support. This 40 pts / 3% thrust in the first minutes of the market caught my attention.
My thought process was if we clear 1550 we most probably run to 1580ish and possibly higher. That strength made me believe that not only we're going to clear that 1550 but also the infamous 1580 level and above that and possibly new ATH will emerge.
I decided to grab 1580 and 1610c. The reasoning was that most probably we'll tag 1580 fast enough for me to cover my costs and take risk off the table. The risk I took was it fades immediately and never crosses 1550 which I assumed it will happen fast enough that I'll be able to salvage something out of the position
The moment we cleared the 1550-1560 range I knew this trade will work but also wanted to take the risk off the table as quickly as possible within 30 min I was able to profit but also now comfortably explore the potential of a new ATH.
Risk management is critical, especially on Friday as we all know how a mega winner can turn into a loss on a single news event. Once risk was off I was focused on managing the position and trying to explore what SHOP could do today.
At this point SHOP was way above key pivot levels and was consolidating around 1600. I felt it was worth holding 1610c for a potential ATH while peeling off profits at some intraday targets
At this point the trade was already extremely profitable while I had a significant profit unrealized, I have cashed out on a portion of the trade and the "pressure" of taking profits was reduced and it was mostly a waiting game for the new ATH
As long as it held 1600 I was pretty confident we'll get close if not clear ATH at 1646
hopeless optimistic? maybe, but I had a plan and already decent booked profit so why not wait to see how far it goes.
Having a plan doesn't mean you don't need to track it and as it got weaker towards ATH I peeled off those 1610 (added 1660 along the way)
Overall was a great day. This is not something that happens every day but being ready and willing to accept what the market wants to give you is an advantage. This means you are willing to give up unrealized gains in return for higher potential gains
A few key points to emphasize:
- This is not a standard trade, it happens once in a long while but you do want to be ready and willing to ride it to significantly profit from it
- Taking risks off early is key and will allow you the flexibility of deciding when you want to get out on higher targets
- Playing multiple strikes allows you to quickly take profits while also trying to hunt for a larger move. Far OTM will benefit from a much more significant IV pump if the move is outsized