the low of the reversal candlestick, then buy Jun 08 $40 puts.
A condition order was set up for PVH
Jun08 $40 Put @ market, if stock price < $40.50
The next morning when I switch on my computer to check on my
trades, the order was triggered as the stock plunge below $40.50
and PVH Jun08 $40 Put filled at $4.50 and closed at $5.00,
$0.50 or 11.1% profit in the same day.
After three trading days the stock was down at $37.00, the option
premium has increased to $5.80. Looking at the chart the MACD
histogram is at about half way, still have room to drop but the
William %R is at the bottom sending me a signal to exit.
The question is which indicator to depend on? If you are greedy you
would have stay on, base on my experience it is better to get out even
if there is a possibility to drop some more.
The stock open lower, many would have refused to get out, by then
the options has gone up to $6.20. I set my stop to $6.10 to protect my
profits if it turns around during half time which is common and I can
sleep without any worries of my profits being wiped out.
The stock has indeed turn around and the stop was trigger at
$6.00, giving me $1.50 profit which is about 25% profits in 4
trading days.
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