Here’s how that trade on Virtu Financial (VIRT) worked out…and another trade on The Trade Desk (TTD) that I’ve got on. (May 14, 2018)


I want to go over Virtu Financial ( NASDAQ: VIRT ). I talked about this over the weekend noting that the way I traded this stock, it was an oversold bounce, I was looking for the kind of move that it had today. It had been kind of gappy; I saw this stock, I picked it up in one of my scans.

My work last week led me to this thing; I am looking at it right at the end of the day. I saw this stock closing above where it had opened. It was way oversold, massive volume. And I thought you know what? I think this stock is done going down. So I took some stock, not near the low, no, I took it near the close. I took it near the close and I also sold some puts on it; the puts were not really very liquid but I sold the puts on it.

For those of you not familiar with option trading, if you sell a put what you are doing is you are obligating yourself to take the stock from somebody who bought the put. You are saying, “Yes, you can put the stock to me. You can make me buy the stock at a specific price.” So I sold some puts obligating myself to buy the stock and then I also bought the stock. I sold the $30.00 puts if I am not mistaken but that trade is over.

The stock gapped up today; I didn’t have great timing on this. I would like to lie and say that I held it all the way up to the very top, but I didn’t. That is not the way I trade. I used to try to and I just wound up losing money all the time. So I sold into this initial move. I made some good money on the stock but then I also bought back the puts that I had sold and I made some money on those too. It was a small trade; not that much to it but it did work pretty well.

I am showing you a similar trade only on the other side. Here is a short sale here: The Trade Desk ( NASDAQ: TTD ). A big move on Friday, today it kind of just petered out. We can look at this on a 5-minute chart. You can see, first thing in the morning, which by the way is when the big moves usually always happen. First thing in the morning the stock gaps up. It peaks; it starts selling off a bit; that is the time to be shorting the stock. I am looking at this and I am thinking, this is a clearly defined risk. Because I see this stock, from last week it is up over 40 percent but it stalled out today. I don’t know what kind of buying pressure it is going to take to push this stock, say, up to $80.00. Not after it already made this big move on Friday. It seems to me like there is going to be profit taking. And so I shorted the stock, nothing fancy and I placed a stop at 77.60, right here.

So what we are doing here on these types of trades is, I am trading the swings and I am going the other way. But I am waiting for a clear definition of what my risk is. I don’t just want to buy a falling knife and I don’t want to jump on top of a rocket ship. I want to wait for signs that the momentum has stalled and then I want to go the other way.

You might try this tomorrow. We will see how this turns out but you know exactly what my trade is now. If the stock is up at 77.65, feel free to email me, if you want and say, “Dan, are you still in the trade?” And I will email you back and say, “Nope! I got stopped out at 77.60.

Free Chart

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