Weekly Trade Insights: SBUX’s Breakdown & TSLA’s Sell Setup

Master Trader Breakout and Breakdown Strategies - Great Trading Setups for all Markets!

Breakouts and Breakdowns: Ideal for igniting or continuing trades in trending markets. We teach how to trade initial breakouts/breakdowns and retracements, reversals, and continuation patterns.

Real Master Trader Trade: The Stock SBUX using a Directional Options Strategy.

Initial Setup: After a gap down on earnings on 5/1, SBUX created a short-term uptrend within an intermediate-term downtrend, stalling at the declining 50-MA.

Bearish Signals: Three bearish reversals at the 50-MA (marked by red stars), followed by a breakdown at the 20/50-MA and two minor consolidation bars, setting up our short under the lows of those candlesticks.

Trade Execution and Additional Analysis

Price Void: SBUX had a large consolidation and a closing breakdown at the 20/50-MA, creating a price void (insignificant support to the left) for an easy-to-manage swing short.

Multiple Time Frame (MTF) Alignment: Bearish setup and reversal on the daily and weekly charts, ensuring a high probability of success.

Options Strategy

Swing Short with Puts: We recommended buying put options due to their liquidity, leverage, and limited risk.

Profit: The trade triggered as shown, yielding a 96% return on capital in five days. With just two contracts, there was a substantial profit. With ten contracts, the profit would have been $1,610.

Conclusion

Master Trader Strategies: Learn our proven methods for high-probability trades in all market conditions.

Directional Swing and Options Trades daily in the Advisory Swing and Options Trader Letter. Master these strategies and achieve consistent trading success.

Master Trader Climactic Sell Setup Explained

What is it?

Climactic Sell Setup: Is defined as a fast, fluid rally away from the 20-MA followed by a reversal, signaling the short-term end of a bullish advance.

Gap and Crap: A variation where a stock gaps up at the open and quickly reverses, indicating a short-term retracement. We often enter a 30-minute low breakdown.

Real MT Trade Example: TSLA

6/26 Trade: TSLA broke out of a bullish consolidation with a Wide Range Bar (WRB), igniting a breakout. Despite a strong trend, they eventually reverse, setting up counter-trend trades. The Swing Course defines trends and how to trade them.

0 DTE Trade: On a recent Friday, TSLA gapped up, setting up a perfect 0 Days to Expiration (0 DTE) (expires today) trade. Even though TSLA was extended on the daily chart, the 15-minute chart remained bullish. We use intra-day timing for high-probability entry points and provide those entries intra-day to subscribers.

Key Strategies

Climactic and Gap and Crap Setups: Most effective when intra-day time frames are vertical and far from the 20-MA.

Income Trades: At MT, we sell short-term expiring calls and puts at turning points for premium (value of the options) collection. For 0 DTE trades (options expiring today), we look for an intra-day setup, signaling the stock or ETF won’t advance further for the day.

TSLA Trade Execution

Bear Call Credit Spread: TSLA gapped higher, but the first 15-minute bar closed with a bearish WRB below major support, signaling a short-term high. We alerted our Advisory Swing and Options subscribers to sell the $260 strike call options, making it a Bear Call Credit Spread.

Profit: As long as TSLA closed below $260 at expiration, our calls expired worthless for full profit. Our trade netted $189 for selling two contracts and $630 for 10 contracts in a few hours.

Conclusion