Leaderboard

So CML has been coming up with all kinds of weird trades of late - one of them was their MAMMOTH BULL Pattern on BZUN in which they claimed that it was ready for a bullish breakout outside of earnings. I took a punt to follow this trade but not as CML Recommended with a long call. I am till holding the trade behind this alert butI wasn't sure I bought this 'CML Mammoth Bull' pattern nor indeed whether it means anything. After all humans see patterns in everything including pure chaos so the question was to make a bet on the trade without risking one's shirt. This I did as follows: STO 5 C SEP21 50 BTO 10 C SEP21 55 STO 5 C SEP21 65 net credit 0.55$ Of course there is a 2,3K margin locked on this trade. I sold the 65 strike because I was sceptical of the pattern and wanted to create some extra padding in case the stock would stall around the 55 mark which would otherwise be the worst outcome. Earlier today I closed the 65 strike and sold the 60 strike for 0.32 $ credit as the trade seemed to be going south. Right now I am down 225$ against the long call being down 1000$ (assuming one bought 5 units) which would have stop lossed today. As it stands I can still afford to wait for expiration - if the stock were to go down more, all options expire worthless and the trade makes money on a stock of 50.50$ and lower. I would hit the same level of loss as the straight out call today only around the 17th of September. Its still ok to wait and see if CML comes through - the 17th is still a ways off and BZUN can certainly move - in August its been at 58 and 48 (either one would suit this trade!) Generally the ratio trade seems to be a better bet for such bullish (or bearish) bets as CML sometimes promotes. The short ITM strike buffers the losses of the long position. If it is an earnings play you have the added advantage that increasing volatility will benefit the OTM option more than the ITM one thereby creating an additional layer of comfort. Its true that the profit slope is less acute than with a straight out call but the risk is really much much much lower. Lesson for anyone following a tip: don't follow a tip blindly - I have actually done rather well from CML alerts but I haven't followed half of them nor executed them exactly as they recommend. Like I said I am not sure I believe these 'Mammoth Bull Pattern' things but at least I still have my shirt. Still holding the trade behind this alert but I did it differently than the straight out call as I wasn't sure I bought this 'CML Mammoth Bull' pattern nor indeed whether it means anything. After all humans see patterns in everything including pure chaos so the question was to make a bet on the trade without risking one's shirt. This I did as follows: STO 5 C SEP21 50 BTO 10 C SEP21 55 STO 5 C SEP21 65 net credit 0.55$ Of course there is a 2,3K margin locked on this trade. I sold the 65 strike because I was sceptical of the pattern and wanted to create some extra padding in case the stock would stall around the 55 mark which would otherwise be the worst outcome. Earlier today I closed the 65 strike and sold the 60 strike for 0.32 $ credit as the trade seemed to be going south. Right now I am down 225$ against 'Destriero' being down 1000$ (assuming he bought 5 units). As it stands I can still afford to wait for expiration - if the stock were to go down more, all options expire worthless and the trade makes money on a stock of 50.50$ and lower. I would hit the same level of loss as the straight out call today only around the 17th of September. Its still ok to wait and see if CML comes through - the 17th is still a ways off and BZUN can certainly move - in August its been at 58 and 48 (either one would suit this trade!) Generally the ratio trade seems to be a better bet for such bullish (or bearish) bets as CML sometimes promotes. The short ITM strike buffers the losses of the long position. If it is an earnings play you have the added advantage that increasing volatility will benefit the OTM option more than the ITM one thereby creating an additional layer of comfort. Its true that the profit slope is less acute than with a straight out call but the risk is really much much much lower. Lesson for anyone following a tip: don't follow a tip blindly - I have actually done rather well from CML alerts but I haven't followed half of them nor executed them exactly as they recommend. Like I said I am not sure I buy these 'Mammoth Bull Pattern' things but at least I still have my shirt.