If you short-term trade and you don't understand "max pain", then you should honestly think about doing something else during the third week of each calendar month.
Because "Opposite George" week is nothing to ignore. It'll cost you a small fortune over time. Maybe a large fortune.
Once again, last Tuesday, three days before August options expired, we held a webinar with EarningsBeats.com members. The purpose of our webinar was quite clear. It was time to cash out short-term long positions, because there was simply way too much risk to continue holding. Let me just give you one example of a stock that we passed along to our members as a possible SHORT candidate - Etsy, Inc. (ETSY). First, check out this chart:
Enter Etsy, Inc. (ETSY):
ETSY closed at 120.86 on Tuesday, August 16th. I told members that max pain on ETSY was at 100.76 as of Tuesday's calculation. That was a "potential" $20 drop by Friday. Well, I was WAY OFF (a little sarcasm). ETSY closed at 107.01.
Had you shorted ETSY at Tuesday's closing price and covered at Friday's close, you'd have profited by more than $1300 for every 100 shares shorted. Each 100 shares short would have covered the price of our service for roughly 17-18 months. It wasn't just ETSY, however. We told our members that the SPY and QQQ could fall close to 6-7%. The QQQ was down nearly 4% by Friday and we might see the balance of the selling early this week. We also provided the max pain level on EVERY stock in our portfolios AND in the Dow Jones AND in the NASDAQ 100. That's a TON of extremely valuable information for traders.
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Happy Trading!Tom BowleyChief Market StrategistEarningsBeats.comBetter Timing. Better Trades. |